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Poured foundations have become the preferred method, although a poured foundation is great in strength these foundations are not without problems.
As can be seen in the picture below, water will find it's way in through cobbling where the wall meets the footing
The problem with concrete block walls is that the mortar joints between the blocks typically develop hairline cracks over time. This hairline cracking is usually the result of thermal cycling (expansion and contraction due to heating and cooling) of both the concrete blocks and the mortar that binds them together.
Shrinking and expanding soils exert and withdraw pressure from foundation walls causing fatigue in the mortar joints over time. This doesn’t mean that cracks only occur within mortar joints; sometimes cracks can be seen in a few or many blocks. Underground concrete block walls typically crack when there is settlement of the footing supporting the foundation walls (often due to erosion), and/or when there is excessive soil pressure against the foundation.
Cracks in poured foundations are not unexpected, this can be caused by settling of footings as well as compaction issues
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Trapped water, typically saturates the concrete blocks causing them to weep or leak onto the basement floor. Additionally, if the cracks in the mortar joints are sufficiently large and there is a sufficient hydrostatic pressure, water will leak into a basement from the mortar joints between the concrete blocks. As can be seen below.
Unless there is significant settlement of the footing, minor cracking of the mortar joints are not really a problem from a structural point; unless the mortar joint cracking is horizontal. However, hydrostatic pressure (water pressure against the exterior wall) forces water into these hairline cracks; this is where basement leaks begin.
Concrete blocks are not solid concrete; in fact, they are largely hollow as you can see in the images below.