THE FORECLOSURE BOOM....This sure looks scary: foreclosures are up 800% in California. Reaction within the industry seems to range from mild fear to all-out panic.
On the other hand, housing prices aren't falling much, as you'd normally expect. In fact, they went up a bit in March. Very weird.
Offhand, my guess is that the problem isn't that this will push the economy into recession. Rather, the problem is that this is happening even though the economy is reasonably strong. But strong economies don't last forever, and if the economy starts to go south even a little bit while foreclosures are still rising, it could start a pretty vicious chain reaction. Keep your fingers crossed.