In Washington, they're talking about housing from 30,000 feet. Here in West Sacramento California, I'm seeing it from sea level.

In a beautiful development where houses came on the market in 2004 for $700,000, I'm looking at a foreclosed house on the market for $415,500. Realtor Karen Bartlett says the bank first put it on the market for $499,000 but got no serious offers. When I asked her if the bank would take $400,000 for it, she said they were offered that before but turned it down. Today, though, "They'd probably take it."

The house next door is also bank owned.

And two doors down lives Karnial Saini, a realtor (the irony!) who says he put down 20 percent on his home when he bought it in '04, but got an adjustable rate mortgage he can no longer afford. "Yesterday I tried to refinance," he says, but his mortgage is for more than a half million dollars, "and the house appraises at $450,000." He says he is probably going to lose his home either through a short sale or by "just giving the bank the key."

He's understandably quite depressed. He's got three kids.

But when I asked him if it's fair to bail him out, Saini admits not everyone deserves it. However, he didn't do a zero percent down loan, his home is just now less than his mortgage and he desperately needs a new mortgage.

What he finds hard to understand is that the bank will agree to a short sale, but it refuses to lower the principal. Both seem to equal the same loss for the bank, but lowering the principal keeps the homeowner in the house and avoids the costs of a foreclosure.

Realtor Bartlett says there is a "glut" of foreclosures here--half the homes sold are bank owned. She says the market can't even begin to return to normal until two things happen. First, there are incentives to buy foreclosed homes and get them off the market (the Senate has proposed a $7,000 tax credit for people who buy foreclosed homes). Second, something needs to be done to help more people stay in their homes to, again, keep those homes from flooding the market.

By her estimates, we're in for another three years of foreclosures if rates keep resetting. Ben Bernanke said today that the Fed rate cuts should lessen the pressure on lenders to hike those monthly payments.

Needless to say, we'll all look back on these times as historic. We just don't know how long until they're history.

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