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It sounds like the perfect situation: you buy a cozy little second home somewhere as a vacation getaway, and are able to use it years later as a retirement cottage. Sounds perfect, right? The problem is that, with any investment – and especially with real estate – things seldom work out exactly the way that we wish they would. You need to weigh your risks and go into everything with eyes wide open, knowing that there is a good chance that things won’t work out.

From sea to shining sea in the United States, housing prices have been in a virtual freefall for the past five years. Sadly, we have reason to believe that we still have not seen the end of this trend: per the S&P/ Case-Schiller Property Index, property values fell almost four percent in the year between November 2010 and November 2011 in twenty major cities. One of those was the Big Apple, New York City. There, the value of construction projects is down a breathtaking thirty-one percent (which amounts to a decrease of over six billion dollars) in just the past year, a fall that has cost over forty-five hundred construction jobs.

Washington, DC has long been known as a city that is good to low-income homebuyers, often subsidizing home purchases that these poor people would not otherwise have been able to afford. Unfortunately, that largesse seems to have turned around and bit them in the rear in these days of a troubled housing market. At present, twenty percent – or one in five – of all buyers participating in the city program, which is thirty-five years old, is behind on their mortgage payment, according to city officials. It’s a startling default rate that is no less than three times higher than the overall national foreclosure rate. The Washington Post has determined that nearly fifty buyers received notices of foreclosure in recent years, while over fifty more are behind on either their HOA or utility liens.

Bank of America has included in its program to donate homes for demolition in Detroit, Cleveland and Chicago held sessions for homeowners to meet with mortgage-modification specialists. Five hundred customers showed up in Cleveland, sixteen hundred in Chicago and fourteen hundred in Detroit. Furthermore, BoA competitor Chase Bank has also established a down-payment assistance program for Detroit city employees to move into vacant homes in designated areas, and CitiMortgage held events in several cities last summer where around one thousand homeowners met with officials about mortgage problems.

Talking about costs: the foreclosure crisis is creating tremendous costs for American families. According to numbers drawn up by The Center for Responsible Lending, foreclosures that took place in 2009 caused almost seventy million neighboring homes to lose an average of seventy-two hundred dollars apiece in equity, for a total loss of over five hundred billion in lost value.

Many American cities have made it a goal to move forward with more and more foreclosure demolitions. In Detroit, Michigan, which has arguably the most blighted housing market in America at present, there is a goal to demolish no less than ten thousand structures by the end of next year. To date, some four thousand properties – ninety-five percent of which were residential – have been torn down. The properties often come into the city’s possession by way of either donation, because of delinquent taxes or failure to respond to nuisance-abatement procedures

There are far too many foreclosed properties in America right now; that’s a fact we all know. The volume of foreclosures sitting around right now is a problem, since these vacant houses not only bring down property values in the neighborhoods in which they are situated, but also attract squatters, vandals, and vagrants, all of which increase the appearance and experience of blight. Criminals use them as a one-stop shop for stripped appliances, cabinets, pipes, doors, and windows. They are ugly, often vermin-infested, and are magnets for crime. They require an input of money for taxes and upkeep, which is then stripped away from any potential return coming from the eventual sale of the property. MSN Money puts forward one solution to the problem: let’s demolish foreclosed homes. Yes, you heard right – demolish them. Bulldoze ‘em to the ground, because we’d be better off without them. Allow me to explain.

Property owners in Detroit, Michigan, have discovered a loophole in tax laws that is allowing them to wave bye-bye to massive tax liens, sometimes hundreds of thousands of dollars’ worth, for just five hundred dollars apiece. How is this possible? Well, according to MSN Money, some ethically-challenged landowners are letting their taxed-up properties slip into foreclosure and then buying them back from the county for the low sum of just five hundred dollars apiece. It sounds too outlandish to be true, but it’s astoundingly not. From Detroit there are coming stories of landowners gaming the system to avoid huge amounts of taxes.

Once upon a time, flippers got a pretty bad rap. These investors, who buy homes at rock-bottom prices and then resell them, possibly with some refurbishment in the interim, chase profits. Before the housing crash, when the market was at the biggest point of the bubble, these folks did a pretty good business for themselves. It was so good, in fact, that flippers took a lot of blame for driving prices up, and the government put laws in place meant to curtail those who would quickly buy and resell homes. Thanks to the tragic state of the housing market at present – yes, it is just that bad – flippers are actually getting a bit of a break, courtesy of the Federal Housing Administration. The mortgage insurer took the unusual step of extending a waiver of its anti-flipping regulations through 2012.

I recently read a letter in a financial advice column in which the letter writer asked whether his elderly grandmother, who has a lot of medical expenses, ought to consider a reverse mortgage to help pay her bills. I thought it was an intriguing question, since so few seniors seem to understand what exactly a reverse mortgage is, how it is given, and when it ought to be used.