As you’ll recall, sellers who sold in a short sale situation could have received a 1099 for the amount that the bank forgave. This would have sent many into bankruptcy.

Now that this crisis has passed, let’s get to work on clearing out these homes that are underwater. If you know of someone who owns a home that has dramatically lost its value, urge them to talk with a professional. The hit to your credit rating is not as bad as it used to be. And for heaven’s sake don’t be embarassed. It’s important to take control of your finances in a business-like manner. Take the emotion out of it!

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Cities hardest hit by the foreclosure crisis are among some of the cities leading a housing recovery, Move Inc. reports in its Top Turnaround Town Report for May. 

Move Inc. compiled a list of Top Turnaround Towns for this month, using year-over-year housing data from the first quarters of 2012 and 2011. Many of the cities in the top 25 that have seen the biggest boosts in price appreciation are also seeing a big drop to inventories of homes for-sale. Some of the states that suffered the worst of the foreclosure crisis — such as Florida, Arizona, and California — have cities represented on the list, and are showing some of the biggest signs of recovery.

The following are the top 10 turnaround markets, according to Move Inc.’s report from May (including the year-over-year median list price increases).

1. Phoenix-Mesa, Ariz.
Median list price increase from Q1 2011 to Q1 2012: +26.94%

2. Miami
Median list price increase from Q1 2011 to Q1 2012: +24.32% 

3. Orlando
Median list price increase from Q1 2011 to Q1 2012: +11.54%

4. Boise City, Idaho
Median list price increase from Q1 2011 to Q1 2012: +17.53%

5. Naples, Fla.
Median list price increase from Q1 2011 to Q1 2012: +14.34%

6. Oakland, Calif.
Median list price increase from Q1 2011 to Q1 2012: +7.07%

7. Fort Myers-Cape Coral, Fla.
Median list price increase from Q1 2011 to Q1 2012: +18.27%

8. Lakeland-Winter Haven, Fla.
Median list price increase from Q1 2011 to Q1 2012: +12.95% 

9. Sarasota-Bradenton, Fla.
Median list price increase from Q1 2011 to Q1 2012: +12.56% 

10. Tampa-St. Petersburg-Clearwater, Fla.
Median list price increase from Q1 2011 to Q1 2012: +11.92% 

“We continue to see signs of stabilization and recovery on the local level throughout the country,” says Steve Berkowitz, CEO of Realtor.com operator, Move Inc.  “By all indications, the 2012 housing market is unfolding as we expected, and we’re encouraged with the progress local markets are making. However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories.”

Kitchen remodels jumped 36% in 2011 as many potential sellers found that their homes are not selling for what they want. They may have to stay longer and are putting in a new kitchen to enjoy while they’re there.

Good plan, but don’t set your expectations too high.

Before making any definite decisions, check out the Cost vs Value report at:

http://www.remodeling.hw.net/2011/costvsvalue/national.aspx