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It's a staggering shift in sentiment -- albeit a little bit of a delayed reaction to the punishing events of the two year-old housing crisis. American homeowners' confidence in their homes' value fell to the lowest level in nearly two years, according to Zillow. In fact, just 20 percent believed that their homes' value rose during 2009, when in reality, 28 percent of homes rose in value.

That sent Zillow's Home Value Misperception Index into negative territory for the first time, to -2, suggesting that homeowners are now overly cynical about the value of their homes.

As for the rest, 50 percent of homeowners surveyed believed their home values fell (reality: 65% of values fell), and 30% believed their home values remained flat (reality: 7% were flat). The online survey of 2,215 adults was conducted in January by Harris Interactive.

"Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule," Dr. Stan Humphries, Zillow chief economist, said in announcing the survey results.

Some homeowners continue to delude themselves, of course. Last year, according to Zillow, nearly half of homeowners felt that local home values would drop, yet 30 percent took a "not my home" attitude -- believing that somehow felt their home would withstand the slowdown.

Zillow spokeswoman Amy Bohutinsky tells HousingWatch that homeowners have absolutely lagged the market in terms of accepting the housing-related recession. The gap between reality (dismal) and homeowners' perception (optimistic) of values was most unequal two years ago, she says, but now it's reaching a more realistic stance.

"It's almost as if homeowners have traveled through the five stages of grief, starting at denial, and finally reaching acceptance," says Bohutinsky. "They're now accepting that there's been a housing recession."

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It's official: 2009 was the worst year ever for foreclosures.

A record 2.8 million properties were hit by foreclosure, according to a new report by RealtyTrac, the Irvine, Calif.-based research firm. That's up 21 percent from 2008, and 120 percent from 2007.

The company reports that half of this carnage comes from just four states -- California, Florida, Arizona, and Illinois, which, together, saw 1.4 million homes make their way onto America's Boulevard of Broken Dreams.

The AP reports that in Illinois, one in every forty homes foreclosed during 2009. RealtyTrac predicts that the nation's foreclosures could hit 3 million this year.

But could 2010 be a tipping point, the year when foreclosures peak and start to diminish? Some economists and industry observers believe foreclosures will peak in 2010 before their levels start falling. Kenneth Rosen, chair of the Fisher Center for Real Estate at the University of California at Berkeley, said so in a Bloomberg interview, citing stabilizing employment and housing prices. The MBA (Mortgage Bankers Association) has also pegged 2010 as the end of the decline.

Let's hope they are right.

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In a recent conference call, where Lennar reported that revenues for 2009 were down by nearly a third, the company's chief operating officer disclosed that the company was streamlining the number and type of models it offers to homebuyers.

The changes reflect a larger shift across the housing market. Gone are the McMansions of the easy-credit days. Small and efficient (such as the Lennar model pictured) is in.

In Lennar's "Horizon at Stetson Valley" community in Phoenix, the newer home plans feature footprints as little as 1,400 square feet for a three-bedroom, two-bath home, or 1,760 square feet for a four-bedroom, two-bath home. And prices start under $200,000.

"It makes sense to me that they would do that," Stephen Melman, an economist at the National Association of Home Builders in Washington D.C., tells HousingWatch. "It's almost analogous to the automobile industry. In the past six or seven years, builders have given customers an explosion of choices."

Home designs and size tend to reflect the economy, Melman says. Since 1973, home plan sizes have consistently trended upwards alongside the economy -- except during recessionary economies in the mid-1970s, early 1980s, and early 1990s. In the second quarter of 2008, he says, the median floor area of a new home in America was 2,216 square feet. The third quarter of 2009? 2,094 square feet.

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Americans are a migratory bunch, and in the past when they've moved they've typically headed westward. But in 2009, relocators showed surprising patterns, according to research Atlas Van Lines. Among the surprises in Atlas's research: Oklahoma, for the first time in five years, is now seeing more arrivals than departures.

"Moving trends have really migrated to the Southwest--and to the Southeast," Kerri Hart, an Atlas Van Lines spokeswoman, tells HousingWatch. "It's hard to say what's driving this. Certainly jobs are a factor, but there are some states like South Dakota and North Dakota that have low unemployment and are still seeing more people move away."

Sorry, Yanks. People are moving to southwestern states like Texas, New Mexico and Oklahoma, and to mid-Atlantic states like Maryland, Washington DC, or North Carolina.

But we were a little bit stumped on Oklahoma. So we poked around, and found that when it comes to old-school as well as renewable energy sources, Oklahoma is a major job creator.

And, of course, Oklahoma did see a few high-profile relocators in recent years: The Seattle SuperSonics basketball team, under Oklahoman Clay Bennett, moved with NBA approval to the state just in time for the 2009 season.

The influx is manifesting itself in a tightening housing market -- at least in Oklahoma City. According to new stats from HousingTracker, Oklahoma City housing inventory was down 7% during the past week, making it the second highest inventory shrinkage rate next to Nashville's among the 54 cities HousingTracker watches -- and backing up the Atlas findings.

If you're planning on moving to Oklahoma City, keep in mind that inventory has shrunk 15% year-over-year, according to HousingTracker. But the price is right. The median price of a home in Oklahoma City? It's fallen slightly to just $156,990. What can you get? For under $160,000 we found a 1920s charmer, a Very Brady 1970s house, and even some speculative construction.

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For a while, home buyers had it good: Nose-diving prices, tax credits for repeat and first-time buyers extended into 2010, incentives from builders and concessions from sellers. But with many markets bottoming out around the U.S., property virgins and pros alike are bumping up against a growing wave of formidable rivals: All-cash buyers.

These bidders are often local investors shopping for starter homes they can rent out or remodel, or just trying to make an easy buck off of a beaten-up foreclosure.

Cash deals are definitely on the rise, according to survey data provided by agents to the National Association of Realtors, which discusses all-cash and other sales trends in its monthly Realtor Confidence Index.

All-cash deals represented about 20 percent of all residential real estate transactions during fourth quarter of 2009, NAR spokesman Walter Molony told HousingWatch. During 2009, all-cash deals represented about 9 percent of the residential market, he notes, versus prior years when they accounted for only 7 percent of the marketplace.

"This indicates a lot of investor activity," Molony says. "Anecdotally, we're hearing about first time buyers losing out to all-cash buyers."

NAR doesn't break out individual markets where all-cash deals prevail, but Molony says the association is hearing that cash talks in distressed markets, such as communities in California, Arizona, Nevada, and Florida. But healthier markets also reflect the trend. NAR's Molony says that in Washington DC cash bidding is big, as evidenced by The Washington Post's recent report about the plight of first-time buyers competing against cash buyers.

Surprisingly, not all cash carriers are investors. Some are would-be primary owners so eager to buy that they'll liquidate their life savings in the hope that their Benjamins will outshine rivals' relatively wimpy pre-approval promises from lenders.

Last month The Real Deal reported that in New York City as many as 40 percent of recent sales may have been all cash. But The Real Deal also told the story of a schoolteacher who took cash from a prior home sale and liquidated her entire savings in the hopes that the $725,000 all-cash offer she made on an Upper East Side co-op would beat out her competitors. (It did.)

Don't have hundreds of thousands of dollars lying around? Don't worry: Not all sellers pounce on cash offers first. Fannie Mae recently agreed to give first dibs on newly listed foreclosed homes to owner-occupants, rather than investors -- for the first 15 days the homes are listed, at least. And some multi-family buildings and communities have set limits on the percentage of units that can be acquired by investors, whether cash-carrying or not.

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In the wake of the Christmas 2009 attempted terrorist bombing of a Detroit-bound Northwest Airlines flight, it's easy for Americans to remember the impact of two planes hitting the World Trade Center towers, the lives lost, and the resulting economic mayhem that ensued. GlobeSt.com recently asked whether commercial owners, lenders, and their corporate renters have reason for fresh concerns about terrorism as a real estate issue, noting that ratings agencies view terrorism insurance as an important component in ratings of commercial mortgage-backed securities.

Terrorism insurance? It's not new. To help protect the commercial real estate industry following the events of Sept. 11, 2001, the U.S. government created a program called the Terrorism Risk Insurance Act (TRIA), which provides an additional layer of federally funded insurance money so that insurers dealing with commercial real estate have additional coverage funds in the event of another real estate-debilitating act of terrorism.

In a recent release, Fitch Ratings stated that it "continues to believe that insurance coverage remains an important component of the U.S. CMBS market, as well as a vital structural protection for bondholders. As a result, Fitch expects all loans to include coverage against terrorism attacks as part of their standard all-risk insurance policies." Fitch Managing Director Bob Vrchota warned that the company "may decline to rate certain transactions with inadequate terrorism coverage."

The commercial real estate industry--and the insurers who work with it--need to get their ducks in a row with terrorism insurance, per Fitch's reminder. But that doesn't mean risk management types are losing sleep over the latest attempted terrorist attack.

Ron Kuykendall, a spokesperson for the Coalition to Insure Against Terrorism, an organization with corporate members who pushed for TRIA's passage, says his group isn't working on any new initiatives related to TRIA or terrorism response at present.

"TRIA is still in effect, and it's an effective federal backstop for insurers," Kuykendall says.

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