This is no surprise. The question is never been whether this would start, it has always been where, and when, and how much, and how fast it moves across the country.

There are very few places in the country that will be untouched by the real estate meltdown, and now the first three questions have been answered, and the 4th question is in process:

On average, a foreclosed property sells 20.3 percent below its market value. The median discount level is slightly lower in Orange County at 19.6 percent compared with 21 percent in Los Angeles County.

The real estate folks are saying that it won’t depress the market because it is only 6% of sales right now, but if 1 of every 17 house sales is at a 20% discount, it will have an effect, particularly as that number goes up, both in terms of percentage of sales, and in terms of discount.

I remember this joke from the 1989-1992 real estate crash in Massachusetts:
Q: Which of these things do not belong:

• AIDS
• Herpes
• Gonorrhea
• A Condo in Massachusetts

A: Gonorrhea. You can get rid of it.