The month of June saw 1,708 Notices of Default and 738 Notices of Trustee Sale.

Even when adjusting for San Diego’s growth, as the graph to the right shows, there were more NODs and NOTs filed in June than in any month during the entire 1990s housing bust.

A common boom-time rationalization was to maintain that a housing downturn was impossible in the absence of widespread unemployment.

Like all the best rationalizations, this one was formed around a grain of truth. Housing busts take place when large numbers of people are forced to sell their homes. And unemployment is often the culprit in such a situation, as it was in early-1990s San Diego.

The mistake was to assume that job losses were the only potential cause of forced selling. The currently sky-high foreclosure rate in the face of positive job growth demonstrates very clearly that they were not. This time, the forced selling has been the result of years of speculative risk-taking by both borrowers and lenders.

Considering that high-risk loans were still being granted in spades until fairly recently, and considering that such mortgages often take years before resetting into the realm of unaffordability, it seems reasonable to assume that the foreclosure rate will remain elevated for some time to come.

— RICH TOSCANO

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