What started as a subprime mortgage mess has morphed into a much larger problem of home value destruction. Houses have now lost value for the seventh consecutive quarter with no end in sight. Are we anywhere near an end to this carnage?

No one knows for sure. That's because we are no longer looking at loans gone bad because people overextended themselves; we are now looking at such a significant fall in house prices that about 30% of homes that were sold in the third quarter were sold at a loss. That's up from 23.7% in the second quarter. We are no longer just dealing with people who made bad credit decisions, we are also dealing with the fallout from massive layoffs and the financial hardships that follow.

Houses being sold now are primarily foreclosures or short sales, but people who must move because of a job loss or for other personal reasons can only do so if they are willing to sell at the same distressed prices. So if you don't need to sell, don't. Unfortunately, as job losses continue to mount, more and more people will be forced to sell, driving prices even lower.

The number of mortgage delinquencies rose to a 20-year high in Q3 as borrowers increasingly found it difficult to make payments within the 30-day grace period, the Mortgage Bankers Association announced Thursday.

The percent of home loans with payments more than 30 days late rose to seasonally-adjusted 5.59%, the MBA announced -- the highest level since 1986. The group's survey began in 1972.

Telling stat

The delinquency statistic suggests that the housing correction "is far from over," according to economist Steve Affinito.

"It's not even the beginning of the end," Affinito told BloggingStocks on Thursday. "Generally during a housing slump, what you see first is a rise in unsold homes, and then a rise in delinquencies, mostly from homeowners who did not sell or could not refinance."

If Chicago Mercantile Exchange traders are betting right, housing prices in ten key housing markets will continue to drop until 2011 [subscription required], according to the Wall Street Journal this morning. The Miami area is the worst hit and expectations are that it will drop another 27.9% between November 2007 and November 2011. Others expected to fall in the same time period include San Francisco (down 25.9%), San Diego (down 18.6%) Las Vegas (down 18.1%), Los Angeles (down 15%), Denver (down 14.4%), Boston (13.8%), Washington, D.C. (down 13.3%), New York (12.1%) and Chicago (down 6.6%).

The CME contracts are based on expected movements of the S&P/Case-Shiller house price indexes. Trading is light, so this report gives us a less-than-scientific view of what might happen in the housing market. Personally. I believe this might be too gloomy a prediction. While prices do still need to drop in most of the areas currently facing a decline in order to get the markets moving again, I'm not sure they need to drop as much, nor for as long.