First of all I need to thank Marc Rasmussen for bringing this segment to my attention on his blog because I was not aware of it.
I am also glad that 60 minutes had the foresight and courage to run a piece like this, even though it does instill concern about the direction of the housing market and ultimately the economy; there is simply too much at stake for this country, our government, and the REALTOR community to pretend that this type of threat to our housing market does not exist. Or to simply hope that the problem will go away or take care of itself. It's not going away, and it's not going to take care of itself without an awful lot of pain for an extended period of time - and quite frankly I'm not sure if most Americans are prepared to weather this type of correction. As we are seeing, a housing correction will indeed spillover into every corner of our economy, the financial markets, and the credit markets.
The point that the 60 minute segment brings up, the fact that there are still millions of loans acting as ticking time bombs, is the fundamental issue as to the reason I wrote the, "It's The Housing Market, Stupid!" book.
This housing and home-ownership bubble that is the result of easy and cheap money and aggressive leverage, has not yet run it's course. In fact, I would argue that we are only one third of the way through a correction. And there are two reasons for this. First, we are going to continue to see millions of foreclosures over the next four years. Credit Suisse recently increased their estimates to 8.1 million foreclosures. Asa result of the first wave of foreclosures, the supply of homes has surged 48% over the past three years (source: NAR). The second concern is that there is not a buyer for these homes that will ultimately end up in foreclosure. With the mortgage market as tight as it is, the demand for real estate has plummeted nearly 30% over the past three years (source: NAR). It is a perfect storm, demand has plunged, and supply has surged. And there is no indication or data that either of these trends is changing course, especially considering the broader economic concerns. 
Ordinarily, if this was just simply an isolated case of home prices declining further, it may not be so worrisome. But the truth is that declines in home values, the leading cause of foreclosures, are anything but isolated. They have a significant spillover effect to the financial markets (including the stock market), the credit markets, and the broader economy (jobs).
While an unpopular position, I will admit that it is my belief that the economy will not be able recover from this current recession until the housing market, the foundation and engine for our economy, can get some price stability. And what this means is that the excess supply of homes (approximately 1.5 million) needs to be absorbed, preferably sooner rather than later as the longer it takes for this to be accomplished, the more homeowners will be at risk and the more damage will be done to the economy.
The government needs to get ahead of this crisis rather than reacting to it. Loan modifications and lower mortgage rates are not the answer, this is going to require aggressive fiscal policy to get Americans to invest in the real estate market in order to prevent a cascading effect on the overall economic health of this country.
www.ItsTheHousingMarketStupid.com
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