Yup, almost everyone's home has decreased significantly in value.
IMO, most of the homes in foreclosure have to do with the the variable interest rate increase and higher mortgage payments. I feel that those that had an adjustable rate are the ones that went into foreclosure because they couldn't pay the payment. This is where I feel Baez may have been when his home went into foreclosure.
For the people who bought homes around the same time as Baez, and had a fixed rate, they are more then likely hanging on because eventually the home will increase in value. For the homebuyers with a fixed rate, they aren't feeling the hardship as their payments remain the same even though the value has decreased. In these cases, it's worth holding on for the years ahead.
I own a home, and mine hasn't lost value based on where homes are now as I bought mine at a good price back in 2002. However, I had an adjustable rate in 2002, and when the Prime Rate started to rise along with my mortgage payment, I had to act quickly, otherwise I would really be hurting with a mortgage payment that would have almost doubled.