Today should be interesting. Yesterday's news said August foreclosures doubled. More than 100,000 homeowners received notices of default last month. Almost 2/3 of them were from California (40,000+) and Florida (26,000). Sound serious? You bet it is. Now the fears are real that our little sub-prime mortgage problem will lead to a recession. From the news I've been reading, there is little doubt the Fed will drop interest rates today.

The decline in housing is now in its second year. With no help having come so far from the Fed, homeowners with adjustable rates have been stuck, frozen in place as their rates adjusted and put monthly paymens out of reach. The rate cut might help if homeowners in over their heads can refinance at more affordable rates.

The problem many will face is that the value of the homes has fallen. That fact may make it difficult for banks to extend loans for the full amount of the original mortgage amount. Remember, the new mantra in real estate lending is caution and conservatism.

A Realtor I know told me this is only the beginning. He says the whole industry is behaving like there is a storm coming, battening down the hatches, keeping heads down. Many have simply left to find work elsewhere. There will be a much larger wave of defaults, foreclosures, repossessions and auctions to come.

It was just over a year ago I met with a real estate professional from California who told me things had never been better, or worse, in his industry. He was frightened at some of the things he was seeing at the time, the prices being paid and the lengths people were going to, extending themselves to "get in" to new homes. His advice to me at the time:

Wait 5 years. It might not take that long; but sometime in the next 5 years home prices in the better neighborhoods will be a lot lower.

I'm starting to see how right he was.