The housing crisis will cause the largest transfer of wealth in our nation's history over the next five years.

We track the daily foreclosure auction results for all the counties in Southern California and have noticed a new trend. The first liens are now routinely being discounted at trustee sale and if they don't receive any bids, the lenders often selling these homes for less afterwards. So we are not just talking about wiping out the surrounding neighbors 20% down payment if they bought at peak; we are talking about taking prices down more from there. The largest discounts of first mortgages we have seen have in none-distressed sections of Orange County been in excess of 40%.

FYI, this is how the lenders drove prices down to 2001 levels in certain parts of Stockton California where everybody had to sell or refinance. Most parts of Orange County do not share the same mortgage profile, but this is why Talega and Ladera Ranch prices came down so suddenly.

The real crisis has always been one of leadership, transparency, and sensible policies.

Bottomline is that we are seeing a real game changer unfold. We have already seem luxury foreclosures sell for 55% of peak prices.