From $85,000 to $8,700 in Under Five Years

This weekend I was exploring the map of Phoenix hot spot crime neighborhoods and cross referencing against the local real estate markets.

The worst neighborhood is the bright red spot at 27th Avenue and Indian School Road. This area has the same level of housing bargains that you can find in Detroit. Here's a house that just sold for $8,700, down from $85,000 in 2006.

According to Zillow, the median price for the zip code has fallen from a peak of $195,000 to a current Zillow estimate of about $50,000. However, the properties that have sold in the last 90 days have been for much less than that, more like $25,000.

I also looked at bombed-out neighborhoods in other states. Here's a house in the 44104 zip code of Cleveland that recently sold for $8,000, down from $16,500 in 1975! In the 89106 zip code of Las Vegas, this house sold for $30,000, down from $249,000 in 2006.

Is there a glut of real estate in this country, or what?

And what about the banks with loans secured by all this real estate - which seems to have dropped precipitously in value over just the last few months? What assumptions are they making in reserving losses for these loans?