Foreclosures hurting the California real estate market

The foreclosure rate in California is continuing to rise. More homes are going into foreclosure every single day.

Why are all these home going into foreclosure?
Loans. The market was booming and everyone got greedy. New loans came out that in my opinion should have been alot harder to get. 100% financing, adjustable rate, etc.

A 100% loan meens when you buy your house you are in the whole and it's usually a pretty deep one. Negative equity right from the start. A monthly payment more than double what the average renter pays. Now the problem is when something unexpected happens and someone gets layed off. Their income drops and they can't afford their mortgage. What do you do now? the bank starts the foreclosure process and if you had any equity you would probably just sell the darn house.

Now we're in a declining market and the whole is getting deeper. All the foreclosures are helping the declining market decline even more. You may have the option to do a short sale. Which in this market doesn't seem to be going over to well unless your house is in excellent condition.

Heres some info on foreclosure that most people don't know. When the bank forecloses on a property they do what they have to to sell that house. Some will do repairs and they will all drop the price they want untill the house sells.
What you didn't know is the bank can 1099 the the owner who was foreclosed on for their loss. So if you owed $400,000 and the bank made back $320,000 that's a difference of $80,000 that they can 1099.

Which means the owners who were foreclosed on, may have to pay income taxes on that $80,000 as well as whatever their real income for the year was. OUCH

Bad news
-more foreclosures = declining home values(for more reasons than 1)
-First time buyers have to save for a down payment because 100% financing will very likely be alot harder to get.