Foreclosures reach record levels

The housing crisis, which it has been argued for so long that it’s a segregated problem within the housing market, officially became an ‘average American’ problem today, whatever the hell that means.

The government reported this morning that 12% of all homeowners with a mortgage in America are behind on their payments or in foreclosure. And those subprime borrowers, well they are still in deep shit as well. 50% of all ARM borrowers are behind or in foreclosure! Wow. The usual suspects of California, Nevada, Arizona, and Florida make up 46% of all new foreclosures.

I have argued for a while that the worst is yet to come. As long as unemployment continues to rise, housing defaults will continue to increase as well. There is a clear correlation between the two. Yet economists will argue that housing is/has bottomed. I disagree.

Another round of foreclosures is inevitable as long as unemployment continues to rise; so or later it will catch up. When it does, we can put in a true bottom and REALLY begin to recover. The government can continue to put a band-aid on a gunshot wound, but it’s only going to help for so long.