Foreclosures Are Everywhere

(MoneyWatch)  Well, the foreclosure numbers are out for the third quarter, and they're the worst on record.

According to RealtyTrac, foreclosure filings (which include default notices, scheduled auctions and bank repossessions) were the highest in Q3 2009 since 2005, when the company began tracking foreclosures.

Foreclosure fillings were down 4 percent in September from July, but up 29 percent from September 2008. September's total was still the third highest monthly total, behind only July and August of this year.

How bad is it? Take a look a the numbers in a few key foreclosure states:

• Nevada: one in 23 housing units received a foreclosure filing, six times the national average.
• Arizona: one in 53 housing units received a foreclosure filing.
• California: 250,000 housing units received a foreclosure filing, accounting for nearly 27 percent of the total number of foreclosure filings in the nation.
• Florida: Nearly 157,000 housing units received a foreclosure filing, a 23 percent increase from Q3 2009.
• Six states accounted for 62 percent of the U.S.'s total foreclosure activity: Nevada, Arizona, California, Florida, Illinois, and Michigan.

While these six states bear the lion's share of foreclosure trouble, every state has been hit hard. Georgia, Texas, Ohio, and New Jersey rounded out the top ten for foreclosure filings, according to the RealtyTrac survey.

The sheer number of foreclosures is bad enough, and the continued downdraft in the jobs market isn't helping matters. RealtyTrac's Rick Sharga said that most of the foreclosures are unemployment-driven these days. Economists agree that the homes now falling into foreclosure are the result of 7.2 million jobs lost during the recession. As long as we keep losing jobs (at least another 200,000 jobs were lost last month), homeowners won't have enough cash to pay the mortgage.

That's why it's a sure bet that Sen. Chris Dodd's (D-CT) Unemployment Compensation Extension Act (a companion to HR 3548) will pass and be signed by President Obama into law. The country can't afford to have one more additional foreclosure, and this measure will help pay a lot of mortgages.

Meanwhile, Sen. Johnny Isakson believes his $8,000 tax credit for all home buyers (who earn less than $150,000 as individuals or $300,000 if married) will also help prevent foreclosures, because there will be buyers for the enormous number of short sales (where homes are worth less than the mortgage balance).

Will it? I seem to keep finding my way back to the main point: When will the U.S. real estate market be able to stand on its own again?