Statistics are hard to ignore. Here's the latest update to the supply/demand graph, with 2009 figures in yellow. The line graphs show inventory (supply) while the bar graphs show quarterly sales figures (demand). As you can see, oversupply and falling sales continue to be the big stories:



Since most stats in the Billings market are looking grim, those looking for something positive often mention the Last Best Statistic: Foreclosures.



For most people, this is a very comforting statistic. How can the housing market be so bad when we're 44th in the country for foreclosures, and only 0.29% of homes are in foreclosure?

I believe the answer lies in the fact that foreclosures will be a trailing indicator during this bust, as I discussed in November. That said, let's take a look at the quarterly Notices of Trustee's Sales and see what seems to be happening.



NOTS are definitely creeping up some. I think 2009 will easily be the largest year for foreclosures this decade, and 2010 will be even worse.

What makes me so sure? Because increasing numbers of people who bought since 2006 are underwater on their loans, owing more than their house is worth. Combine this with the unemployment and other economic difficulties beginning to hit Billings, and I don't see any way foreclosures are staying flat.

Of course, a Notice of Trustee's Sale is just that, a notice. It is the first step in the foreclosure process. After the NOTS, one of three things can happen:

• Borrower becomes current, and the Trustee's Sale is canceled
• Borrower sells the house and the loan is paid off
• Borrower fails to pay, and house is foreclosed on

Here's a look at the results of Trustee's Sale Notices this decade:



There's not a whole lot to glean from this yet, other than the steady upward march of NOTS. If the housing market continues to be difficult, I expect the percent of properties foreclosed to be higher.

Remember, during the 1980's bust, foreclosures led to lower prices. During this current bust, lower prices will lead to underwater borrowers, which will lead to foreclosures.