It is more likely that foreclosures are affecting it, although not killing it, than short sales. Short sales, except on properties that are in terrible condition that no one really wants, pretty much go close to market value. There are a variety of things that have affected prices, all coming together at the same time. Job losses causing people to go into foreclosure, changes in the economy, tightening of lending guidelines, which is not a bad thing, by the way, and surely a host of other issues. Too many people getting greedy was a bad thing as well. The places that are affected the most are the ones where the most number of people are out of work,. as well as where the greatest number of investors were buying, Florida being one of them. In Florida, aside from the fact that there were investors thinking they could put money down on contract in a new development, and flip it before they have to close, there were many people who were able to get high loan-to-value loans on second homes without showing income. Once they couldn't make a profit off them, or found that they couldn't make the payments on this as well as their primary residence, they couldn't continue to pay their loans.