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In some of the worst housing markets in the country, deflation has reached double-digit proportions. While housing woes have reached around the country, California appears to be poised to rank among the worse. One of the primary reasons for this is the fact that in the last several months California has experienced the largest rate of deflating home prices. In fact, home prices in California have fallen at levels that have been unprecedented.

Miami, Florida has also proven to be a difficult market at the moment. Here, the weak mortgage market and record high rates of foreclosures have led to decreasing home values as well. In fact, Miami has been among the worst home markets in the country for two years running. The condo boom in Miami just a few years ago has fueled further problems that have now spiraled into a massive real estate bust.

The high flying Florida and California markets may have been easy to predict as being the first ones to crumble when the real estate market took a turn, there are other markets on the verge of falling that were not so easy to see. In hindsight, it is easy to see the rapid increase in home values during the recent boom as an indicator of the coming crash.

There are other markets where prices did not increase as much or as quickly, which could be one reason why they were not at the top of everyone's list - until now. Markets now turning into real bears are Massachusetts, Nevada, Indiana and Arizona. Decreasing house values as well as a significant number of foreclosures in these areas are adding to their worsening real estate woes.

In the coming months, several million adjustable rate mortgages are scheduled to be reset which will only lead to an increase in problems for all markets. In the face of higher payments on their adjustable rate mortgages more and more homeowners will find themselves with the harsh reality of being unable to pay their mortgages. These homeowners will either face a short sell on their homes or an unpleasant foreclosure as refinancing options dry up.

The remainder of 2008 still looks bleak for the housing market according to many indicators. Indicators show it likely for new home prices to drop by 18% and second hand home prices will still continue to fall. There is some indication that the crash could level off in the last quarter of 2008 or the first quarter of 2009, but even then experts agree home prices will not rebound to their previous levels.

Still, there may be some hope for certain areas. In many markets sub-prime mortgages have either left the market through quick sales or foreclosure. The stimulus package that is on the horizon is anticipated to help the housing market in many areas.

First-time home buyers may soon find the relief they have been seeking since they were forced out of the market, however, it may longer before homeowners begin to experience that same kind of recovery. This is because most homeowners are still reluctant to sell and lose the equity they once had in their homes. The simple fact is that many homeowners have yet to accept the fact that they can no longer get the same prices for that was possible just a few short years ago.