One to Two Million to Loose Homes to Foreclosure

More than 1 million families will lose their homes in the next few years, by one estimate. Another study predicts 2.2 million foreclosures.

Soon, the credit crunch that's now squeezing mainly the poor is likely to hit millions of middle-class homeowners who took out risky loans during the great housing boom earlier in the decade.

The popularity of adjustable, zero down, stated income, and very low start rate loans were geared to let people buy a more expensive home than they can truly afford. Here in San Diego, there loans keep our housing market on an up-swing and to higher levels years longer than than what would have been expected.

Now, millions of Americans may receive a letter advising them of their mortgage "reset" or "recast" with a much higher monthly payment. Plus, in many cases, they will be finding out that their mortgage balance is much higher than what they originally borrowed. Alas, those below market interest rates and payments added the amount 'really' due back to their principal. If this was not a shock.  After all, they should have read what they were signing), Many will soon discover that the value of their properties are now BELOW the amount they owe on their mortgages!

Since the Summer of 2005, I estimate many San Diego neighborhoods are well into double digit property value depreciation. With the average San Diego home in the $550,000 range, we are talking about declines over $100,000 in some cases!

In San Diego, sales will continue to fall. Tougher mortgage underwriting standards will eliminate about 20% of the potential buyers, including 50% of the subprime buyers and 25% of the Alt-A buyers, according to estimates by Credit Suisse.

More foreclosures and just normal selling would further depress prices, which could turn into vicious downward spiral. Housing remain a drag on the economy far longer than the current majority envision.[tags]foreclosure,real estate,housing bubble,San Diego real estate[/tags] San Diego downtown condos