No Housing Bottom Yet

Japan's correction lasted 10 years. Its doubtful ours would last that long. Everything just moves faster here. A subprime lender starts to struggle, he files for bankruptcy a week later. Families start to grapple with making their mortgage payments, the house goes on the market that weekend. We don't wait around for much here in the states.

It's Still All About Perception

But even if you don't believe any of the above, you should worry about the perception. In the end, what matters is how people feel about their current financial situation.

And if the foreclosures snowball, that will have a serious impact on a homeowner's psychology. If you live in an area with $500,000 homes but your neighbor had to foreclose on his home and sell it for $350,000, that's a huge chunk of equity that just vanished from the neighborhood.

And when people start to panic, hysteria sets in and the effect of that might actually be worse than the dismal stats.

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