Real Estate is most definitely in a mess. I've been in real estate 27 years and have seen nothing like this. 

When I first moved to Arizona from Michigan in 1992 I worked for a property management company that managed the largest RTC and Hud contract in Arizona.  Being from Michigan I had never heard of the RTC.  The RTC was created by the government to bundle and sell off commercial property, office buildings and apartment buildings that investors walked away from and HUD handled most of the residential housing foreclosures.  

It was a feeding frenzy of investors driving the properties prices up and the savings and loan industry making risky loans.  Back in the the late 80's and early 90's this had the most effect on Arizona, Nevada and California so most of the country knew little, cared little, or just chose to ignore it because it was somewhere else and did not directly effect them.  

Here's a little history that we may have forgotten.

Remember The Keating Five?  The Keating Five were five United States Senators accused of corruption  in 1989, igniting a major political scandle as part of the larger Savings and Loan crisis of the late 1980s and early 1990s. The five senators, Alan Cranston of California, Dennis DeConcini of Arizona, John Glenn of Ohio, John McCain of Arizona, and Donald Riegle, Jr. of Michigan, were accused of improperly intervening in 1987 on behalf of Charles H. Keating Jr., chairman of the Lincoln Savings and Loan Association, which was the target of a regulatory investigation by the Federal Home Loan Bank Board.

"Lincoln Savings and Loan collapsed in 1989, at a cost of over $3 billion to the federal government.  The U.S. Savings and Loan crisis of the 1980s and early 1990s was the failure of 747 savings and loan association (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the U.S. taxpayer. The accompanying slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II."

The Keating Five scandal was prompted by the activities of one particular savings and loan: Lincoln Savings and Loan Association of Irvine California. Lincoln's chairman was Charles Keating, who ultimately served five years in prison for his corrupt mismanagement of Lincoln.  

Savings and loan associations had been deregulated in the early 1980s, allowing them to make highly risky investments with their depositors' money.  Sound familiar?  Is History repeating its-self?   Keating and other savings and loan operators took advantage of this deregulation. Savings and loans established connections to many members of Congress, by supplying them with needed funds for campaigns through legal donations. Lincoln's particular investments took the form of buying land, taking equity positions in real estate development projects, and buying high-yield junk bonds. 

Lets move forward to the late 90's when tech stock was king, often referred to as, dot-coms. Companies were seeing their stock prices shoot up if they simply added ".com" to their name.

A combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual specutlation in stocks, and widely available venture capital created the environment in which many investors were willing to overlook traditional buying of shares because they are undervalued but buy in anticipation of further rise.  The dot-com bubble burst March 10, 2000.

The dot-com bubble crash wiped out $5 trillion in market value of technology companies from March 2000 to October 2000.  Some believe the crash of the dot-com bubble mutated to the housing bubble in the U.S.

I'm sure you know someone who pulled their retirement/pension plan from the stock market after the dot-com bubble burst because they were no longer averaging a 21% on their return but now a low 8%? How many of them turned to real estate because they could make huge returns?

Ralph Block wrote in 2005: "Many baby boomers appear to have decided that the stock market won't provide them with sufficient assets with which to retire, and have taken advantage of "hot" real estate markets and low (e.g., 5 percent) down payments to speculate in residential real estate. The number of homes bought for investment jumped 50 percent during the four year period ending in 2004, according to the San Francisco research firm LoanPerformance."

How many times in the mid 2004, 2005 and into 2006 did you see an investor lie about owner occupying a home? How many times did you see a buyer over bid because they thought they could flip it in a few days and make a killing? How many times did you see a lender provide a loan that they knew the buyer was not qualified for? And when the market came to a screaming halt and they couldn't make their return, they walked away leaving the rest of us holding the bag again.

How do you divide up a mortgage that was sold to 27 different investors that was worth $300,000 in 2006 and is now worth $100,000.00 in 2009? The investors don't want to negotiate with the homeowner that wants to keep their home? The home buyer that has lost because all the investors had driven up the market when they purchased and needed a home. The same investors that have blighted our neighborhoods with vacant, vandalized homes and appalling dead landscaping. Well, now you all own a little piece of nothing and I don't feel one bid sorry for you.

As for government bailout, which each and everyone of us will pay for, seems to be a necessary evil to keep our country from collapsing. When government deregulated banking the rooster stopped watching the hen house just like what happend with the savings and loan deregulation.

This time I want to know who is going to jail from the banks and mortgage companies,  as Charles Keating did from the savings and loan industry.  Instead of seeing the CEO's collecting a $124 million dollar bonus for stepping down (stop rewarding for bad behavior), I want to see them behind bars and I will gladly pay the tax increase for that!

Shame on the American greed!  Wake up!  If it Sounds too good to be True...Stop! It makes me sick to see what this greed has done to our country and the state of economy.  Make your money the old fashion way...Work hard and smart!