US home prices aren’t done falling. According to the National Association of Realtors, the median price in the third quarter dropped in 111 out of 150 markets. That’s pretty accurate, comprehensive and scary. The average price was down another 4.7% in the quarter.

Foreclosures, on the other hand, are a totally misleading statistic. October’s foreclosures are up 7% from the previous month, but down 31% from last year. Down 31%? You’d think that’d be good news.

Well, not really. If you remember, at the beginning of this year it came out that lenders were foreclosing on families without any proof that they actually owned the property. So they were doing foreclosures where they didn’t have the mortgage and couldn’t prove the debt. And that’s resulted in millions of stalled foreclosures. In about half the US states the lender needs to go to court to prove they’re the owner of the home. If they can’t do that – they can’t foreclose until they get their paperwork in order – or located in the first place!

So foreclosures have gone down to a trickle for most of this year. The mortgage loans are still in arrears, but it’s just given people a lot more time in their home. When they pick up again, foreclosures will set all kinds of new records just to catch up. There are still millions out there, and millions of homeowners over 90 days past due.

Right now, 10.7 million homeowners, which is 22% of all homes with loans on them, owe more than they’re worth. That’s staggering enough, but the average they owe, over and above their value is $52,000, according to CoreLogic, as of November 2011.

Add to that another 2.4 million who have less than $5,000 of equity and it’s over 27% of all homeowners.

In Nevada, one of the hardest hit states, at one point over 70% of homes were underwater, and it’s still at 58%. Some states are better off than others, but nationally, there is over $700 more owing on homes than their values.

It’s pretty sad and there really isn’t an end in sight for years and years. THAT is one of the biggest drags on the economy. And the lesson for us: Don’t finance more on your home than you can afford, avoid another line of credit which gambles your house away, and focus more on getting your debt down than up. Because 100% of all homes in trouble are ones with a mortgage. Nobody has ever lost their home once it’s paid off.