There isn’t a sufficient floor of buyers in those markets to stop further declines and foreclosure sales that appear to be on the horizon. It depends on the market. For example, the recent Case-Shiller 20 cities report shows that coastal California has had a positive trend: Los Angeles +4.4%; San Diego +5.0%, and San Francisco +5.5%. Another area of strong growth is Washington DC (+4.5%) which is an island of government transfer payments in a sea of trouble. The bad news is that estimates of homes underwater and likely to default have gone up, depending on who you wish to listen to. The most recent and scariest number floating around is from Laurie Goodman at Amherst Securities: I estimate the housing overhang to be more than 7 million units — these loans are likely to be liquidated and are creating a huge shadow inventory. Adding borrowers with substantial negative equity but who have not yet become delinquent, I place the total size of the problem at 11 million to 12 million units; in other words, at the current trajectory, more than one in every five borrowers could face foreclosure if stronger policy measures are not taken. Clearly, the biggest problem for these borrowers is negative equity.