Foreclosures are on the rise by a substantial amount. I'm seeing it in the lower end of the market right now, mainly in first time homebuyer type housing where it takes two incomes to pay the mortgage and one or both have gotten laid off from work.
I've never been through a market collapse like Houston of the 80's and I wonder what it will take for this foreclosure rate to filter on up into the higher income brackets.
An Enron type failure of Freddie and Fannie would be very, very bad for all involved in the Mortage/Real Estate/Building industries.
I was there and lived through it. I can tell you stories, like one of my salesman who walked out of his house into another, because of the change in interest rate and payment. People were moving out and deeding their house to someone in the cemetery, the real estate market in Houston before then was over heated, over priced with sky high interest rates. A friend of mine, who was made redundant at Houston Natural Gas, bought sheets of plywood and hired street laborers and boarded up vacant house for a living. Whole neighborhood were going vacant, I bought a condo that six months before was on the market for $90k for $18, then two months later the one next door sold for $9.
The feds with recovery plans for the S&Ls (I am blocked on the name) actually fouled things up even more, but that is a another set of stories.