Given the recent report that says 23% of houses that have mortgages have negative equity… I’d say we still have a bubble that needs correction.

The negative equity is heavily concentrated in five states – and California is one of them.

According to the report there are 2.4 Million mortages with negative equity in California alone.

http://www.calculatedriskblog.com/2009/11/negative-equity-report-for-q3.html

Some percentage of that will hit the market through short sale, foreclosure, deed-in-lieue… causing a downward pressure on prices.