Home prices in 20 of the nation's major metro areas in July were collectively down 16.3 percent from a year ago, according to the S&P/Case-Shiller Home Price Index released today. Prices in those metro areas were down 19.5 percent from their peak in July 2006.

"There are signs of a slow down in the rate of decline across the metro areas, but no evidence of a bottom," said David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, in a press release issued to announce the numbers. "Little positive news can be found when cities like Las Vegas and Phoenix report annual declines as large as -29.9% and -29.3%, respectively, and all 20 cities are still in negative territory on a year-over-year basis."

Las Vegas and Phoenix posted the two biggest annual declines in home prices of the 20 metro areas tracked in the report, followed by Miami with a 28.2 percent decline and Los Angeles with a 26.2 percent decline. Charlotte, N.C., home prices were down 1.8 percent from July 2007, the smallest annual decline among the 20 cities tracked in the report, followed by Dallas, which reported a 2.5 percent annual decline.

Does this make it a good time to buy real estate? June Fletcher of The Wall Street Journal sagely advises that the answer is "For some people, yes. If you ...

• have access to credit
• have fat cash reserves
• aren't already over-exposed in real estate
• have a secure job or income stream
• expect to hold the property for at least two years"

But be forewarned, prices are expected to fall further, and will take awhile to rebound, according to many economists.

"I think this time residential housing is in the 100-year flood, and I think it's going to take a long time to recover," said David Shulman, senior economist at the UCLA Anderson Forecast, at the Zelman & Associates Housing Summit in Dallas on Sept. 17.

Shulman said he expects home prices nationwide to go down 25 percent from peak to trough, although he acknowledged that prices could "overshoot to the downside." And while modest appreciation could resume in late 2009, prices won't be back to their 2006 peak until at least 2016, possibly as late as 2020 in some markets, according to Shulman.

(More from Shulman and several other leading economists in the October issue of the Foreclosure News Report, scheduled to be available in mid October.)

We'd like to hear from you when and if you plan to step in and start buying. Now, in 2009, or will you wait until 2020 when everyone has forgotten about this housing slump and is raving about skyrocketing home prices?

Peter Miller, author of the Common-Sense Mortgage, has offered up some alternatives to the proposed $700 billion bailout plan. Below are excerpts from an article he wrote about these alternatives.

"One alternative is to simply offer low-interest loans to borrowers who currently have toxic mortgages.

"Figures developed by Rick Sharga, senior vice president at RealtyTrac, show that the likely cost of low interest loans would be roughly $220 billion — hardly cheap, but a lot less expensive than the $700 billion plan now being discussed in Washington.

"Sharga's figures look like this:

"Some 2.5 million homes are likely to be in the "process of foreclosure" during the coming 12 to 18 months. If a typical home has an average sale price of about $220,000 (many homes now facing foreclosure were financed several years ago with two loans, thus first loans are often significantly less than current market values), and if the average mortgage is $176,000 (80 percent of market values) then the total value of such mortgages would be $440 billion. If the refinancing program was limited to half of the homeowners who will probably lose their homes to foreclosure, Uncle Sam would need to provide loans worth $220 billion.

"(Another) alternative idea works like this: Instead of replacing loans, give lenders an amount equal to 15 percent of the mortgage principal in exchange for concessions. In other words, current loans would stay in place, there would be no principal reductions and lenders would not be forced to sell their paper in the midst of a declining market.

"Imagine if the average cost to modify a loan — that is, reduce the interest rate to something fixed for 30 years with no reduction in principal — was 15 percent of the loan amount or $26,400 ($176,000 x 0.15). Lenders accepting this money now would have to modify each current mortgage to a fixed rate established by Uncle Sam as well as a renewed 30-year term.

"Borrowers in this scenario would be required to share future appreciation 50/50 with Uncle Sam until the entire $26,400 was paid back at the time of sale. If a property was sold and the entire amount was not repaid, the borrower would be required to pay $500 a year until the debt was fully paid off. In effect, the pay-off system would resemble the concept approved over the summer for first-time home buyers, a system which provides a $7,500 tax credit up front that must be repaid when the property is sold."

Read full article.

What do you think?

Could a flood of foreclosures that began to swell last year be close to cresting? That could be a first-blush interpretation of the numbers in the RealtyTrac U.S. Foreclosure Market Report released today. The chart below shows how the annual rate of increase in all three foreclosure actions tracked in the report -- defaults, scheduled auctions and bank repossessions -- slowed in August.

The rates of annual increase in defaults and scheduled auctions have been steadily slowing down each month this year, but this was the first month in which the rate of increase in bank repossessions (REO) has slowed since the beginning of the year. That seems to indicate (and please forgive this somewhat rambling analogy) that the torrent of defaults that began in earnest about 18 months ago may be working their way down the foreclosure river and spilling into the ocean of bank-owned inventory -- while the number of new defaults being added upriver is moderating. But alas, that would be labeled by many as a naively optimistic interpretation, given the possibility of another downpour of defaults looming from as much as $500 billion in outstanding option ARMs, many of which are expected to recast to higher payments in the next three years.

In addition, one must be careful about reading too much into a decreasing rate of increase. It's a bit like a politician arguing that a new budget will decrease spending when it's actually just slowing the rate of increase in spending. After all, the RealtyTrac report does show that foreclosure activity continues to increase across the board -- defaults, auctions and bank repossessions. And both the total number of properties with foreclosure filings (more than 300,000) and the foreclosure rate (one in every 416 U.S. properties received a foreclosure filing during the month) were the highest since RealtyTrac began issuing the report in January 2005.

View state-by-state data

The Federal Deposit Insurance Corp. is having no trouble keeping busy these days. In fact the agency’s head just announced this week that it has adjusted its estimate of how many of the nation’s banks are seriously in trouble of going out of business this year upward from 90 in Q1 2008 to 117 now.

So it’s no wonder that it has no time to play nursemaid to a bunch of foreclosed real estate in foreclosure-laden Detroit, Mich.

In all, the agency has contracted with the J.P. King Auction Company of Gadsden, Ala., to auction off 83 properties ranging in values from as low as $2,500 up to a home in the Grosse Pointe area that was recently listed for $1.3 million.

The property mix will include single-family, duplex, triplex and commercial properties plus land. Locations include Wayne, Jackson, Eaton, Genesse, Tuscola and Lenawee counties.

With one in every 176 households receiving a foreclosure filing during July, the Detroit metro area had the 18th highest foreclosure rate among the 230 MSAs reported by RealtyTrac for the month.

Reporting 4,781 properties with foreclosure filings for the month, the Detroit metroplex saw a 10 percent decline in foreclosure activity from the previous month and was 45 percent below the activity level reported in July 2007.

For real estate investors looking for a long-term buy and hold investment strategy, this auction may be a good potential source of bargain properties to consider.

The auction is set for 2 p.m. on Sept. 30, 2008, at the Rock Financial Showplace.