There are a number of theories about why stimulus programs and all-time low mortgage rates have failed to breathe new life into the nation's real estate market. The supply of homes remains bloated, home prices continue to be depressed and the foreclosures keep coming.

Of course, a large part of the problem is that banks are skittish about offering loans to anyone other than those with immaculate credit and rock solid employment. The prevailing fear is that prospective borrowers might fall into the same pattern of default and foreclosure.

According to real estate research and consulting firm First American CoreLogic, more than 11 million mortgages are "underwater," meaning that the amount owed to the bank is greater than the value of the home. Meanwhile, foreclosures continue at a rate of more than 300,000 a month. RealtyTrac reports that foreclosure activity climbed in 75% of the U.S.'s major metro areas during the first half of the year.

Even all-time low mortgage rates don't seem to help. Freddie Mac announced Thursday that the rate on a 30-year fixed home loan has dropped to 4.54% -- the lowest level since 1971 when the agency began measuring the rate. Yet another disappointment has been the Obama Administration's $40 billion Making Home Affordable program, which aimed to keep three to four million Americans who face foreclosure in their homes. In June, the government reported that 1.3 million homeowners have received trial modifications under the program. However, only 300,000 of those modifications had become permanent. And only a tiny part of the money earmarked for the program has been spent.

As each month passes, it has become clearer that unemployment is the single greatest cause of high foreclosure rates and falling home prices. The correlation between cities with high jobless rates and extremely high foreclosures is stunning.

24/7 Wall St. looked at new RealtyTrac foreclosure figures for the first half of 2010 and the unemployment rate by city. (The definition of "city" is based on the Bureau of Labor Statistics top 200 urban areas of population by size.) The 10 worst real estate markets in the country each had unemployment levels above 12% in June. Two cities in California , Merced and Modesto, had jobless rates above 17%, nearly twice the national average of 9.6%.

The foreclosure rates from RealtyTrac are based on the number of housing units out of 100 in a metropolitan area that received a foreclosure notice during the first half of the year. The national average for the six months was 1.28 out of 100. In the ten worst real estate markets, however, each city had a rate of over 3 out of 100. The highest rate was in Las Vegas at 6.6 homes per every 100.

Not so surprisingly, cities in Nevada, Florida and California dominate the list of worst real estate markets. These are states that have been hit particularly hard by layoffs, especially in construction. California has also been firing state workers and has sharply cut what it pays state contractors. The gaming business in Nevada has been hurt by a drop in discretionary income among those likely to spend money in Las Vegas and Reno. Florida has a population made up of a large number of retirees, some of who have to return to work, or attempt to do so, because their savings was upended when the stock market fell in 2008 and early 2009.

Here are the ten worst real estate markets in America:

1. Las Vegas-Paradise, Nevada


Unemployment Rate: 14.5%
Foreclosure Rate: 6.6%

2. Cape Coral-Fort Myers, Florida

Unemployment Rate: 13%
Foreclosure Rate: 4.98%

3. Modesto, California

Unemployment Rate: 17.3%
Foreclosure Rate: 4.59%

4. Merced, California

Unemployment Rate: 18.1%
Foreclosure Rate: 4.47%

5. Riverside-San Bernardino-Ontario, California


Unemployment Rate: 14.4%
Foreclosure Rate: 4.37%

6. Stockton, California

Unemployment Rate: 16.5%
Foreclosure Rate: 4.37%

7. Vallejo-Fairfield, California

Unemployment Rate: 12.2%
Foreclosure Rate: 3.91%

8. Reno-Sparks, Nevada


Unemployment Rate: 13.6%
Foreclosure Rate: 3.76%

9. Bakersfield, California


Unemployment Rate: 15.7%
Foreclosure Rate: 3.67%

10. Port St. Lucie, Florida

Unemployment Rate: 13.4%
Foreclosure Rate: 3.05%


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w_diago

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July 29 2013 at 1:52 AM Report abuse rate up rate down Reply
spike

God bless Obama.

August 02 2010 at 3:17 PM Report abuse rate up rate down Reply
spike

I don't think as many blacks lost homes as whites.I could be wrong about this but;I think they are a bit more cautious with their money

August 02 2010 at 3:09 PM Report abuse rate up rate down Reply
spike

I hear a lot of garbage about President Obama being a dictator.Did he seize office? Has he cancelled any future elections?Has be bypassed the other branches of government to enforce his will on the people of america?Exactly what has he done to earn this title ,dictator? You may not like President Obama and thats ok.You can vote against him in the next election.If Obama was a dictator that would not happen.In fact he would have his police hunt you down and kill you or through you in prison.Obama is merely your president,temporarily.He is NOT A dictator.
God bless President Barack H Obama

August 02 2010 at 2:09 PM Report abuse rate up rate down Reply
garyrjas

Old people in Florida are not being overtaxed. They live in apartments valued at less than $50,000 for the most part and therefore pay no property tax since they get a $50,000 exemption. We have no income tax in Florida either. Thats the problem, all these old people moved down here, don't pay any taxes, but use all of the amenities and services. Also, whoever bought a new car for $1800 bought it about 40 years ago. Even a new toyota corolla in 1978 fetched $2800 without anything, including A/C. And in those days the average paycheck was about $11,000 a year, today you can make almost $20,000 at minimum wage. So a lot of fact checking needs to be done on these blogs, most of the comments are just not true.

August 02 2010 at 7:45 AM Report abuse +1 rate up rate down Reply
commish12804

everyone knows that the main problem in California lies in who's in the Governor's Mansion, I mean sure occasionally an actor can jump to politics and hit it big, like Ronald Reagan did. But let's face it, Schwarzenegger was much more talented as a big time action star.

August 02 2010 at 7:35 AM Report abuse -1 rate up rate down Reply
wtf kaaate

poor California

August 02 2010 at 3:17 AM Report abuse -1 rate up rate down Reply
Jimmy

Long sustained easy money policy was to blame. When Real Estate bubble started to grow, we got lots of offers from the Banks flooded my mailbox trying to entice us to use Home Equity Line of Credit to borrow like Washington. At that time, the cost of borrowing/tax advantages, easy approval process got me hooked to buy things that I probably don't need (upgrade home, buying more real estates to flip). Now the market went sour, bank freezed our HELOC and forced us to pay up, increase taxes due to fiscal crisis from local municipalities, reduced hours/elimination of jobs have finally made us realized that getting into debt have serious consequences. Now many have left with huge debt that will take decades to pay off. Both the financial section and ourselves are to blame for this catastrophy.

August 02 2010 at 2:55 AM Report abuse rate up rate down Reply
Jimmy

Long sustained easy money policy was to blame. When Real Estate bubble started to grow, we got lots of offers from the Banks flooded my mailbox trying to entice us to use Home Equity Line of Credit to borrow like Washington. At that time, the cost of borrowing/tax advantages, easy approval process got me hooked to buy things that I probably don't need (upgrade home, buying more real estates to flip). Now the market went sour, bank freezed our HELOC and forced us to pay up, increase taxes due to fiscal crisis from local municipalities, reduced hours/elimination of jobs have finally made us realized that getting into debt have serious consequences. Now many have left with huge debt that will take decades to pay off. Both the financial section and ourselves are to blame for this catastrophy.

August 02 2010 at 2:55 AM Report abuse rate up rate down Reply
Jimmy

Long sustained easy money policy was to blame. When Real Estate bubble started to grow, we got lots of offers from the Banks flooded my mailbox trying to entice us to use Home Equity Line of Credit to borrow like Washington. At that time, the cost of borrowing/tax advantages, easy approval process got me hooked to buy things that I probably don't need (upgrade home, buying more real estates to flip). Now the market went sour, bank freezed our HELOC and forced us to pay up, increase taxes due to fiscal crisis from local municipalities, reduced hours/elimination of jobs have finally made us realized that getting into debt have serious consequences. Now many have left with huge debt that will take decades to pay off. Both the financial section and ourselves are to blame for this catastrophy.

August 02 2010 at 2:55 AM Report abuse rate up rate down Reply