If the current turmoil caused by the current foreclosure levels was not enough, here is some more potentially devastating news coming your way in the California real estate market. Soon to be released by DataQuick Information Systems, a new report is supposed to show a further rise in foreclosure activity in Southern California, with more homes going under the hammer over the coming few months.

Almost 40% of all homes sales are already foreclosed homes in March, and this trend is set to continue for some time largely due to further resets in home loans that are expected mid-2008. According to research done by Pew Charitable Trusts, which is essentially a non-profit organization looking to make policy changes in public policy, this increase in foreclosure activity is likely to continue for some time, and they are expecting one foreclosed home for every thirty-three homes in the country by 2009. If this seems shocking, then the rates in Southern California are expected to be even worse with one home in every twenty oing under the hammer.

Interestingly, the report also shows that people who are paying their mortgages on time are also likely to suffer due to further fall in property prices largely caused by excessive real estate inventory as a direct result of foreclosed homes. The report foretells a $107.2 billion fall in the sale of homes along with the tax base of the state by 2009 end. This makes it roughly $14,282 fall for every homeowner on an average.

Kil Huh of the Pew Trust says “At this point, given how severe the crisis is … we’re focused on the community effects that might take place.”, while Heather Peters, who chairs the Governor’s Task Force on Non-Traditional Mortgages wants to try and help people keep their homes as far as possible. She adds “There are a lot of people who were able to qualify and make their payments at the initial interest rates but could not afford the resets, and it’s better to keep those people in their homes.”

Further notes from the report mention that the high foreclosure rate is due to sub-prime loans, and almost a quarter of all of between 2005-2006 were all from this category. 64% of these borrowers are going to feel the foreclosure pinch at some time.

If you think the scene is bad in California, then Nevada is even worse off with one in every eleven homes likely to face foreclosure, adds the report. Arizona is the state with a home out of every eighteen homes likely to end in foreclosure. The state with the lowest foreclosure rate is expected to be North Dakota, which is likely to have one home in every 165 homes foreclosed.

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The recent rise in foreclosures are not only making homeowners lose their homes, but is causing losses to neighbor’s as well. For example, let us take the case of Valerie Guerra’s home in Liverpool. The value of her home as depreciated by more than $100,000 due to falling real estate prices, even though her husband and her have been clearing all their mortgage payments on time. Even though she had nothing to do with it, she suddenly finds herself $100,000 poorer, with a large chunk of her home value gone.

Valerie says “I certainly believe my house is worth less than what we paid, but we’re here for the long haul.” The Guerras are hardly alone. They are lucky that they are not looking to sell their home in a hurry. Even people who want to get out of neighborhoods where there have been a lot of foreclosures, are stuck because they are facing a massive drop in the price of their homes. As it is, lenders have taken over hundreds of lots in many neighborhoods in East Bay that were foreclosed, and this is now taking its toll on the rest of the neighborhood that continues to live in the same vicinity.

Though buyers tend to get some good deals from foreclosed homes being auctioned, the hard reality is that falling property prices have erased years of gains for many people who had bought homes many years back just because they live next to a bank-possessed property.

A Fremont citizen, Mary Ann McFadden, who has two foreclosures on her block adds “I’m sure the foreclosures have affected our property values. I feel sorry for the people who lost their homes.”

The McFaddens and the Guerras form a dwindling circle of homeowners that are suffering in the aftermath of a crashing real estate market that was in the middle of a so-called ‘boom’ till the middle of last year in East Bay.

A resident of Brentwood, Kareen Bell says “Our values have dropped dramatically,” Having bought their home for around $865,000 a couple of years ago, they have seen their house drop in value to roughly $600,000. There are those in Brentwood who have seen their property values fall by $250,000 in a short period of time.

You can tell from overgrown weeds, and unkempt gardens that you are in the midst of a neighborhood overridden with foreclosure. Homes all around are empty, many vandalized and used for parties, most featuring auction notices.

Kareen Bells adds “It’s scary to see people moving out all the time. The house across the street from us is foreclosed. So is the one behind our home. So is the one down the street. At least six houses near us have been foreclosed.” Things have taken a turn for the worse for these people who have religiously paid all their mortgage payments.

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January saw a 45 percent jump in the rate of foreclosure across Wisconsin, compared to last year. The economic and mortgage problems continued, affecting the real estate market. The Milwaukee based website, ForeclosureWl.com released data, according to which the foreclosure rate was up by 50 percent in Milwaukee County, and 80 percent in Dane County. The president of the company, Robert Jansen said that the rate of foreclosure would remain high in 2008 and some experts had predicted that the situation would not improve before 2010.

The number of foreclosures all over the state was 2,443 in January 2008 and the daily average was more than 116 per every single business day. The maximum number of foreclosures were in Milwaukee County, where the figure was 616, followed by Dane County at 124, Racine at 116 and Brown at 111. In January there was a rise of 69 percent and a fall of 23 percent in the rate of foreclosure in the Wisconsin counties. There was no change in the rest.

The president of the Greater Milwaukee Association of Realtors in Wauwatosa, Mike Ruzicka, said that he had assumed that the foreclosure rate would come down by 2009 as problems in lending and subprime mortgages came to a head during last summer. He had noted that a number of mortgages under those categories often faced balloon payment or interest reset in the coming months. He further says that they had assumed a period of 18 months to put things in order. To Jansen, nothing seems to have changed. According to him, resets in adjustable and subprime mortgage rate, results in a marked increase in the monthly payments of mortgage of a number of home owners.

Also, since the real estate market had cooled down and there was an overall increase of the numbers of homes in the market, the situation became more difficult for people who were trying to sell off their homes in order to avoid a foreclosure. However, Ruzicka had observed the fact that, the market was able to absorb the foreclosures and the prices were not affected as such. It is expected that some data on the pricing of these properties which are sold by Realtors, would be made available officially by next week. Ruzicka feels that the situation seems to be improving in January. January generally marks a good beginning because this is the time when people who are buying houses for the first time, venture out to the market.

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