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It’s been a year since we started talking to people about all things real estate. In Blog Years, that’s 52 interviews, 222 podcasts and 403 posts, on subjects ranging from shadow foreclosures to Federal loan modification programs to environmentally friendly home design.

Today, The Real Story looks at what we’ve learned about the financial side of real estate: the first big lesson being that not only does every story have two sides, but also roots and branches that connect it to dozens of other stories as well, some worthy of headlines and some that would get lost in a big news day. In the last year, we have seen the Federal government step up its participation in the housing market, with the FHA taking on the role of a new subprime source—making loans with only 3.5% down. Needless to say, FHA loans now make up 25% of ALL new mortgages in the country—and HALF of all new home mortgages. By October, when the FHA’s reserves fell to .53%, well below its 2% reserve threshold, Congress stepped in, loan requirements were tightened, and minimum credit scores were raised. John Burns and his associates from John Burns Real Estate Consulting were on Capitol Hill for this news; the full report is in our archives.

Early this year, Representative Barney Frank announced that Fannie Mae and Freddie Mac, privately-owned and taken over by the government in 2008, are  “likely to be abolished.” Why? Although they are giants, owning more than $5 trillion in residential debt, they haven’t been able to make it without significant taxpayer aid (to the tune of about $110 billion.) Chris George talked about his view of the government stepping back and letting private industry re-enter this part of the financial market last year; his discussion is still topical.

Stan Humphries, chief analyst from Zillow.com, told The Real Story that there are about 3 million foreclosures in the current market and that one out of every five US households are under water. Currently, there are approximately 500,000 homes in the US whose owners are not making mortgage payments. To put it in perspective, although foreclosures are no longer front page news, more foreclosures are projected for 2010 than 2009 and there are at least 4-5 years of foreclosures in the pipeline.

We have been told that the real estate market has hit bottom and learned to tally what Carolyn Said, real estate and financial reporter from the San Francisco Chronicle, calls “surface signs of stability.” We’ve been advised to keep an eye on the job market, the notices of default, negative equity, increasing interest rates, and to watch what happens to demand as tax credits are withdrawn. We have our marching orders; we’ll be reporting back on all of these issues in the next few weeks.

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In three years as a reporter covering real estate, Carolyn Said of the San Francisco Chronicle tells The Real Story that she’s learned more than she ever expected: that the actions of sub prime lending in Antioch could have implications in international financial markets; that a return to classic old values may be the best new idea of the decade; and that although we may be optimistic about market recovery, that there are no quick fixes.

Carolyn suggests that the kind of Financial Fantasyland that so many Californians loved visiting in the last few years may be closed down permanently, and that life as normal may be whatever we create as the New Normal.

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The Real Story tried out a new term on Carolyn Said, real estate and financial reporter for the San Francisco Chronicle. We call it “the working surprised”—those people with good jobs who find themselves still working 40-50 hours a week at the exact same position as they did before the recession—but trying to make do with a 20 to 40 percent pay cut. These people aren’t counted in the unemployment figures, naturally—yet their means of contributing to their household and their mortgage have been reduced drastically.

Also in today’s discussion, Carolyn talks about the disappearance of “organic sellers”—people who have a home to sell because of changes in household formation, the beginning of retirement, and the like. If they don’t have to sell their homes, they are holding on to it and putting life events on hold so they don’t have to take such a loss. Of course, the end result is another kind of shadow inventory, this one comprised of resales that are being held off the market in the hopes of better days, better prices. The markets that have held onto their home prices the best? The close-in coastal areas, such as San Francisco, Marin and San Mateo. The worst? With declines up to 60 percent, that would be Solano County.

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The Real Story is talking to Carolyn Said of the San Francisco Chronicle this week. Carolyn, who writes about both financial and real estate topics, has gained a wide perspective from interviewing people about foreclosures in the last three years. Where she had a hard time finding people who would even admit to being in a foreclosure situation at the beginning of this downturn, she now talks to people who are in foreclosure not because they bought their homes during the run up of the market, but because they took out loans out against the equity in their homes to support the calling of their lifestyles—jet skis, vacations, cars.

She also tackles some of the questions about job growth in today’s interview, indicating that business is very cautious about adding jobs. Temp jobs and contract jobs are coming back, allowing employers to watch for signs of sustained revenues before adding permanent employees to their rosters. Of course, some employers are working the system, using temporary staff to sidestep paying for the additional overhead costs of full time employees.

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Many leading real estate analysts will tell you that the best indicator of a market’s recovering health lies in its months of inventory. According to Carolyn Said, real estate and financial reporter for The San Francisco Chronicle, there are some factors at work that will raise those numbers in months to come. The first is the movement toward “strategic defaults” among homeowners, where people who are financially able make the decision to stop making mortgage payments. They see it as a way of building up some wealth – inasmuch as they can live mortgage-free in their home for six months to a year – as they position themselves for the next encore of their financial lives. These strategic defaults will add to what is called “shadow inventory” – homes that are not yet in the mix, but are on their way back to the market.

Carolyn also reminds The Real Story that this is the year to start looking at the impact that the resetting of option ARMs – adjustable rate mortgages – will have on the foreclosure stock. Originally set with low payments and five years to recast into a fully-amortized loan, some of these option ARMs will be reset into numbers that will as much as double the current monthly payments. There is no guesstimate yet of how many of these homes, often sold to higher-end buyers, will join the shadow inventory.

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Last year, KCBS hosted a business mixer called “Making Lemonade Out of Lemons”—with a panel of real estate experts talking about their views on the market. The Real Story caught up with panelist and San Francisco Chronicle reporter Carolyn Said last week to get her take on where the market is going in 2010.

Although Carolyn starts out today’s podcast by listing some of what she terms “the surface signs of stability”—less inventory, a rising median price for the Bay Area and a stemming of the deluge of foreclosures that characterized 2009—she reminds The Real Story that a few months of stability is not a strong indication that the real estate market has turned a corner.

Indeed, although foreclosures are occurring at a slower pace, the number of defaults—an indicator of future foreclosures—is on the rise.  And the Federal government’s HAMP (Home Affordable Modification Program) has seen only about one million home loans modified in the past year. Carolyn introduced The Real Story to a new term: trial loan modification. This program sets up a three month “trial” to see if the homeowner can make the modified mortgage payment on an ongoing basis. So far, only 20 percent of the trial modifications have been converted to permanent loan modifications.

Listen to Carolyn’s five-part interview this week by downloading a new segment of the interview every day, Monday through Friday.