Housing crisis far from over

As of August, more mortgages are delinquent than ever. While the first wave hit and hit hard, the second, possibly even bigger foreclosure crisis is on its way.

Let's walk through the history of this mess.

From around 2004-2006 a lot of people got mortgages who shouldn't have. This includes all of the crazy "exotic" mortgage loans that reset after 1-3 years and ended up doubling homeowners' monthly payments, making them unable to buy the property. Most of these foreclosures are in the system now, getting flushed out. For the past year, I'd venture that this group makes up the majority of foreclosed properties.

But we should not forget the economic crisis that has emerged in September 2008. From Lehman to Circuit City, big names went down in all sectors leaving a lot of unemployed people. Worse yet, most new construction stopped, leaving contractors without jobs. Many of these people were not part of the first group; but they have been on unemployment for most of 2009. These are the everyday people, of whom many were NOT sub-prime to begin with, who are now facing foreclosure.

I think that we could easily see prices fall another 20-30% in certain areas, such as LA, Phoenix, Las Vegas, DC, and Florida.

We'll know the full extent by the middle of 2010, but don't believe for a second that buying right now will get you the best deal.