Foreclosures grew by 50% from last June.  Simply, for every two foreclosures then, add another one now.  That’s a worrisome statistic in this economic environment.  One in every 501 (.2%) of households received a foreclosure notice last month.

Just by taking a very quick glimpse at foreclosure and real estate data its impossible to understand how analysts are predicting a “second half rebound” or 2009 to be the savior of real estate.  These numbers represent homes either in foreclosure or those that will soon be in foreclosure.  After foreclosure comes a sale, usually at a very discounted price which will flood the supply of homes and drop property values universally.

As the supply of homes rise you also have the problem with dropping home prices, less HELOC availability and the worry that a huge supply of homes will ruin the overall real estate market.  Since the real estate boom started to the time it ended, home ownership was only up by 2% of the population.  So many of these homes are not first homes but second homes or third homes, all investments.  The shift was not into property but in and out of property.

A projected 2.5 Million homes will be in foreclosure this year alone.  That figure, though it seems high, represents one home per every 125 people.  What is staggering though is the year over year increase of 40% or 1 million homes.  At that rate its inevitable that trouble will eventually show its face.  Stay tuned, there will be more here.