The pain seems to be extremely localized. Things have slowed a bit in the Chicago suburbs, but I've seen a few "SOLD" signs go up in the last few weeks after not much time on the market. Los Angeles is a mess. They just broke up a mortgage fraud ring that is going to result in roughly 5000 houses getting foreclosed on. It's getting to the point where subcontractors are getting stiffed by developers who run out of money, and the contractors end up placing a lien on the houses they've built but were not paid for.
Not sure whether it was the same one, but there was a fraud ring in Riverside county, down near Murietta. It's going to be ugly....