The cities that are showing signs of stabilization and those that continue to unravel.

Wishing you'd left the game earlier is a time-honored Las Vegas tradition. Today, that's true not only for gamblers but for homeowners there. The last time Las Vegas properties were worth more than the average mortgage? August 2003.

Blame overbuilding and risky loans, a gambling mentality or even the desert sun, but based on Thursday's results from the S&P/Case-Shiller home price index, which measures metro home prices in 20 cities through December 2008, Las Vegas is the weakest market in the country. Prices are dropping quickly (down 4.81% since last month and 33% in the last year), the pace of decline is accelerating at the third-fastest rate in the nation, and based on lost equity, homeowners are out 65 months of mortgage payments.

All signals that things aren't likely getting better any time soon.

"Vegas is a market unto its own," says Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real estate investment firm. "I don't know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there's some force out there in the universe that I'm not aware of."

The S&P/Case-Shiller home price index, released monthly, examines repeat home sales in 20 metro markets, including the city core and surrounding suburbs. This means that while prices in tony San Francisco neighborhood Pacific Heights might be holding up, the net effect of including a bankrupt suburb like Vallejo brings down the metro area's score. Each city's score is assigned based on the price difference from 2000, which is scored as 100. So San Francisco's score of 130.12 means prices are up 30.12% from 2000. It still has the potential for a further fall, given the 31% year-over-year drop.

Forbes also analyzed monthly declines and year-over-year declines in home prices to determine where prices were falling fastest and where those drops were picking up momentum. It's not a good thing for San Diego that prices from November 2008 to December 2008 fell 2.13%, but as prices declined by 2.29% from October to November, and 2.44% from September to October, the speed with which prices are falling is slowing.

That slowing rate of decline, also seen in places such as Denver, Washington, D.C., and Boston, helped rank those cities as some of the stronger markets in the country.

Contrast that with Minneapolis, where prices fell just 0.96% from September to October, but by December, the rate of month-to-month declines had jumped to 4.6%, an unwelcome acceleration.

Next, to rule out places in complete depression, we looked at how many months of equity homeowners have lost. Places like Detroit (-2.98%) and Cleveland (-2.07%) haven't declined as quickly over the last month as Seattle (-3.63%) or Charlotte (-2.55%), but that's because prices in those two Rust Belt cities are so depressed it's difficult for them to fall any further. Detroit and Cleveland homeowners have lost 141 and 92 months of equity, respectively, whereas Seattle and Charlotte prices have only declined for the last 39 and 33 months, respectively.

One other factor to consider with the Case-Shiller numbers is that the index tracks repeat home sales. That means cities like Tampa and Miami, which are notorious for overbuilt new inventory and high numbers of foreclosures, perform better on the index than they ought to, as those two factors are not tracked.

"Case-Shiller doesn't take into account new construction or foreclosure sales," says Jonathan Miller, president of Miller Samuel, a Manhattan residential appraisal firm. "In some of these markets, I'm not sure how you can ignore new construction or foreclosures."

Another city with foreclosure and new construction problems is Phoenix, where bad loans have mounted and mortgage delinquencies, a forebearer of foreclosures, have risen.

"It's pretty gruesome," says Anthony Sanders, a finance professor at Arizona State University. He points to delinquencies as a major problem and a sign that the Valley of the Sun won't be bouncing back any time soon. In Phoenix, seriously delinquent loans--those that haven't been paid in 90 days--have increased from 3.5% to 27.3% for subprime loans since this time in 2005. Adjustable-rate mortgages that are seriously delinquent have gone from less than 1% to 20.2% in the same period.

With those problems looming on the horizon in many cities across the country, Obama might need more ammunition than his proposed $75 billion foreclosure prevention package offers.

Then again, even in a boom-bust capital like Los Angeles, if you bought in 2000, paid your mortgage on time and are still in your home, you've seen a 71.5% price appreciation. There's something to be said for that kind of responsible, long-term investor.

The Associated Press

4:19 PM EDT, October 30, 2008

ALBANY - New York foreclosure filings fell 10 percent during the third quarter, reversing a yearlong trend, according to new figures.

State officials and data trackers attribute the improvement in part to a new lending reform law giving New Yorkers an extra 90 days to work to save their homes. But they warn that the drop in foreclosures could be just a temporary reprieve.

That's because other states showed a drop in foreclosures soon after they implemented similar laws that were followed by sharp increases when the initial grace periods expired.

"Unfortunately in many of these cases what you're seeing is just delaying the inevitable," said Rick Sharga, senior vice president of marketing at foreclosure listing service RealtyTrac Inc., which compiled the figures released Thursday by the state Banking Department.

New York's lending reform law, enacted Sept. 1, requires lenders to wait 90 days before starting foreclosure proceedings. The idea is to give homeowners more time to figure out how to best cope with their debt.

Even though it was only in effect for one month, state officials say the new law likely had a lot to do with the decline in foreclosures. There were 14,477 foreclosure filings in the third quarter that ended Sept. 30, compared with 16,025 in the prior quarter.

State Banking Superintendent Richard Neiman said many lenders likely pulled back on their foreclosures before the law took effect. But he was cautious about reading much into the latest data.

"Let's wait to see how the data comes out for the next quarter," he said.

Foreclosure figures for the quarter ending in December will be more telling because they will capture foreclosures filed after the 90-day waiting period established by the new law.

Other states that have adopted similar laws saw sharp increases immediately after the initial waiting periods were through. For example, the foreclosure rate in Massachusetts leveled off last summer after that state adopted a 90-day waiting period. It spiked 465 percent after the initial period expired, Sharga said.

"The likelihood is the majority of people are still going to wind up in foreclosure," he said.

Earlier this month, RealtyTrac reported that national foreclosure filings in September were down 12 percent from August, with much of the decline attributable to waiting-period laws. In California, for example, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.

But it's unclear how effective they'll be in stemming the tide of foreclosures. Most states, including New York, lack regulations requiring the lenders to restructure the loans, Sharga said.

"They're missing the mechanism to really solve the problem," he said.

I have started doing some research on this subject. I mean deep research and I have contacted some local and some not so local banks. I have also contacted some Government agencies who oversee these homes.

It seems that when the banks finally foreclose on a home, (It takes non payment of over 1 year to the bank on the mortgage to be foreclosed on). If the home owner keeps paying the property taxes and just stops paying the bank, it seems the banks (especially now) don't want to deal with having to take the home back.

REO's or "Real Estate Owned" is what the bankers call the foreclosed homes and properties on their books and in their possession. They give the listing directly to a Real Estate Agent in their area who specializes in foreclosures. I have found the name of this individual after many phone calls and conversations with bank personnel.

Do some google searches for REO's in your home town and you will be amazed at what you will find.

More to come from my experiences as I start to make more and more calls and gain contacts in this area.

bc