Even as stocks continue to rally on the back of financial stocks, we keep getting more and more evidence that shows that we are still in the midst of a serious and worsening housing crisis that hasn’t finished playing out yet.

In a report issued yesterday 08/14/08, Realtytrac, a company that tracks foreclosures, said that foreclosures rose fifty-five percent in July 2008, compared to July 2007. The foreclosure activity in July also represented an eight percent sequential growth from June 2008.

In July 2008, more than 272,000 homes received at least one foreclosure notice. In July of last year, the number was 175,000.

As more and more houses go into foreclosures, retail banks will be hit with more losses. As it stands, Wall Street firms have already lost a very lucrative business, that of packaging mortgages and reselling them as securities. We also know that banks are making less loans, so their bottom line will be impacted. So as talk of financial stocks having hit a bottom keeps growing, investors would probably do well to avoid rushing into loading up on these stocks.

foreclosure subprime housing crisis