According to several experts, the residential real estate market is poisoned to deflate at around 40%-50% in many areas of the country, specially in high speculative areas such as in California, Florida, Arizona, etc. Furthermore, foreclosures will greatly increase in the country according to several statistics and projections. It doesn't take more than to look at the work of the prominent economist H.S. Dent (www.hsdent.com) or doing a quick search in a bookstore for a myriad of recent economic books that talk about the upcoming Greater American Depression.
Many homeowners have a very difficult decision to make in these historical economic times. Their properties are in a position now that it'll be extremely difficult to make them cash flow positive as rentals, and/or to sell them for more than what their underlining mortgages are. It's overwhelming to see the amount of new investors created during the 2001-2005 residential real estate boom. These investors where speculators with little investment education who wanted to jump on the train of quick real estate appreciation; in many occasions renting their properties out and getting negative cash flow in exchange for hopes of future appreciation. They ignored well known facts in the professional investment world: In order to get positive cash flow, most of the time you need to buy in the rare market where high cap rates are the norm (annual net operating income divided by property price. For example, a $1,000,000 property with $60,000 of net operating income per year has a cap rate of $60,000