It’s not often you catch them red-handed.

So many times you think something is off, but it’s never this obvious. I saw two headlines in the wee hours, on the RealtyTrac foreclosure data that is being released today.

The Bloomberg headline reads, “Foreclosure Filings in U.S. May Jump 20% From Record 2010 as Crisis Peaks.”

This is remarkably bad, because homes have been foreclosing en masse since 2006.

But even more remarkable was the USA Today headline, dealing with the same RealtyTrac Foreclosure data – “Foreclosures were off 26% in December 2010 vs. year ago” – concentrating on some inane data comparing foreclosures from holiday season 2009 to holiday season 2010.

My jaw dropped. Of course USA Today has quite a different audience than Bloomberg. But the American public is not being prepared for the hard truth – there is another leg down in housing this year.

Ricky Sharga, a higher-up at RealtyTrac, explained that this year, “We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery. But it’s probably not going to feel good in the process.” -Bloomberg

Now, I don’t need a bunch of data to tell me that housing prices have yet to bottom. Unemployment is still very high, and housing supply greatly exceeds demand. These simple ideas make it impossible for housing to be rebounding or getting better, as USA Today leads us to believe. In the end, real estate prices are almost certainly going to return to their long term norms, 120 years of norms on the Case-Shiller index.

I see neither the Obama administration, nor the main stream media addressing this issue at all. They should, because the quicker we take the hit, (at least 10% down from here to touch a trendline in place since 1890) the quicker we can be done with the pain. People will value homes for what they are – a place to live, and not an investment bubble. Here’s how this scenario should look: