It is amazing to watch the continuing fallout from the mortgage market.  Banks are going down. Freddie and Fannie are in the soup, and we see the government making attempts to set things right.  It seems like everything is tied to this crisis, and there is undoubtedly a lot we do not know.  I spent some time on the Mortgage Fraud Blog tonight looking for content, and was amazed at the number of people that are being prosecuted for wrongdoing - mostly wire fraud and mortgage fraud.   It sometimes seems to me that there are some things I just do not wish to know.

Which brings me to tonight’s subject - the number of people selling real estate at a loss.  The market is correcting, yet we are a very long way from bottom.  California and Florida are especially hard hit, where real estate has climb in value way disproportional to other areas of the country.  I have seen homes listed in California that are in price ranges that are unbelievable for the amount of space available.  2 bedroom/1 bath homes with less than 1,000 square feet go for 600-700 thousand dollars.

While on vacation, I took a look at real estate in Anderson Indiana, and found that large homes with a nice lot will go for 65-75,000 dollars.  No, they don’t have an ocean view, but they are in nice neighborhoods and are well taken care of.

According to Zillow.com, a real estate site, nearly 25% of all homes sold nationwide fetched less than sellers originally paid in the past 12 month ending in June.  Stan Humphries, Zillow’s vice president of data and analytics, had this to say: “It’s stunning what’s happening out there.  The numbers are the worst we’ve seen and it’s not just the magnitude of the problem but the scope - so many markets are affected.”  California takes the hardest hit, with 63% of homes sold during the past 12 months in Merced taking a loss.   Prices currently have fallen 40% over the past twelve months, and are down an astounding 56% since 2006 - 2 short years ago.  Other figures include 63% of sellers in Stockton, Calif., who lost money during the same period, 60% in Modesto, Calif., 55% in Las Vegas and 38% in Phoenix.

These numbers don’t lie.  They show that the market is far from seeing bottom yet.  Billions of dollars are being lost, and the only solution seems to be a short sale.  Right now, a third of homeowners nationwide owe more on their homes than they are worth.  Until this sees correction, the market is going to be doom and gloom.