Day of reckoning for shadow inventory and distressed properties -- 40 percent of properties in foreclosure have not made a payment in two years or more.

"The name of the game is confidence. The housing bubble was largely a giant psychological ploy based on easy access to debt and a large cult like mentality that home values would only go up irrespective of underlying economic fundamentals. Bubbles work this way and play on consumer behavior and the flaws of our primordial brains. Deep down we still have a few things to work out and we are seeing these things play out on a global stage. Around the world you are seeing housing bubbles from Australia to China to the United States. Prices have done very little in the last four years after collapsing"