The Housing Bubble

It’s Friday desk clearing time for this blogger. “The construction industry has been hit particularly hard. Sites that were once vibrant areas of future planning are now just desolate fields with a lot of people out of work. And the construction industry is one that Barbara Hartman, of the Career and Service Center of Southwest Florida, says stands out. ‘The other person in that family is required to get back to the work force to earn money,’ said Hartman.”

“Marijah Gruszewski hasn’t worked in seven years. She said for a while, it was all going just fine. Now, she’s ready to team up with her husband in the working world to get it all back. ‘We had a house, we had a brand new car, and we actually lost it all last year,’ she said. ‘We’re taking it day by day. Hopefully something will come through for us.’”

“Ivy Hernandez once had a job in the mortgage industry. About three years ago, after living in Norwalk her whole life, Hernandez bought her first home in Ansonia - with the help of a subprime mortgage. She is eight months behind on mortgage payments and facing foreclosure.”‘

“It’s hard,’ said Hernandez. ‘I have four kids.’”

“The average price of a single family house in New London and Windham counties dropped more than $67,000 in the second quarter compared to the same time last year, according to the Eastern Connecticut Association of Realtors. The past three months saw the fewest units sold for the least amount of money than during any other second quarter in the past five years.”

“Broker Camille Taylor said bringing buyers and sellers together has been tough lately. ‘Buyers are hesitating and they’re making the biggest mistake when they hesitate,’ she said. ‘They think every seller will give their house away, and they won’t.’”

“Bob Zarnetske, a Norwich real estate attorney and member of the City Council, said he’s had few closings on his schedule and plenty of clients seeking protection from foreclosure.”

“‘It’s obviously a lot more fun to work with people who are realizing a dream,’ he said, ‘than to work with people who are fighting to keep it from dying.’”

“The real estate bust has cut sharply into the revenue of the Martha’s Vineyard Land Bank for a second successive year. Eleanor Wilson of a multiple listing service, said the land bank numbers are consistent with what Island real estate agents are seeing.”

“‘The Brazilians were shoring up that bottom end,’ Ms. Wilson said. ‘But a lot of them are leaving. I’m showing a 21 per cent drop between the first quarter of 2007 and 2008 in sales.’”

“Agent inventories were down over the year by 11 per cent, from 550 unsold properties to 449. ‘Those were the people who just put their properties out there, hoping someone would be dumb enough to pay the asking price, saying ‘I’m not going to sell my house if I can’t get absolutely top dollar for it’ she said.”

“Austin realty companies say the city’s market is still strong despite a dragging national real estate market. Starting this fiscal year, there has been an increase in the housing surplus in West Campus, said agent Mike Bolduc.”

“‘Every year in the last three years, there’s been 1,000 or more new units,’ Bolduc said. ‘This year, there’s probably more like 2,500 new units, and suddenly there’s a lot of leftovers.’”

“The Australian Bureau of Statistics figures showing slumping building approvals have sparked fears of a price and rent explosion that will price even more prospective buyers out of the market. The ANZ’s senior economist, Paul Braddick, said yesterday that Australia faced a critical and potentially chronic shortage of housing.”

“‘A growing housing shortage is setting the scene for the mother of all housing booms,’ Mr Braddick said. ‘Underlying housing demand is already outstripping new supply, and the gap is set to widen sharply, driving pent-up housing demand to record levels.’”

“There may be rumours of a condo slowdown in urban Toronto, but just west of the city a new demand for urban-style projects is changing the skyline and the landscape. Last week, Amacon developers released both of its new buildings as part of the Parkside Village project in what it says is an ‘unprecedented move’ to sate the appetite for urban living in Mississauga.”

“‘People were standing out in the rain waiting for them,’ said said Debbie Cosic, sales broker for Parkside Village. ‘Amacon didn’t want them to come in just to see a sea of red dots, and think that everything had been sold.’”

“There has been an ‘unprecedented’ number of houses going on the market in Saskatchewan in recent weeks, according to the Canadian Real Estate Association. ‘Record numbers of new listings are creating more balanced resale housing markets in many centres, and nowhere has this trend been more evident than in Regina and Saskatoon,’ the association said.”

“It’s a different market than it was a few months ago, agrees Gord Archibald, the executive officer of the Association of Regina Realtors. Buyers in Regina are now rarely bidding up above the asking price, Archibald said. Even if the overall number of sales is down, it isn’t necessarily bad news for sellers, he said.”

“‘The average price is holding, so we’re not seeing a retraction as far as property values are concerned,’ he said.”

“A survey real estate company First National New Zealand suggests more homeowners are choosing to rent their properties rather than sell them and receive a low price.”

“Rowan O’Connor…the Auckland-based owner of three rental properties said he first had his three-bedroom Langholm house on the market at $274,000. But after dropping $20,000 from the asking price and still getting no joy, he decided to hang on to it ‘for the time being.’”

“‘We had some tenants in there who left it in a pretty average condition and [we] did it up really nicely,’ he said. ‘We figured it was better to sell than get tenants in to do the same thing again but it just didn’t happen.’”

“A property investor who bought a flat for £175,000 at the height of the housing boom has ended up in a negative equity nightmare after its value nosedived by almost 50%. Maurice Conroy, who owns a string of buy-to-let flats, bought the studio in Pimlico last summer.”

“”It’s like being hit in the stomach,’ he said. ‘It’s the biggest drop I’ve heard of and I scan all the property news. A £95,000 drop - that’s 50%. Even if it sold for £100,000 that’s 40%. I questioned the agents and they said they cannot value it at more than £1,000 a foot.’”

“The flat is 120 square feet. Mr Conroy and partner Caroline Faulkner secured it after a bidding war last August. Its original asking price had been £150,000.”

“‘Two bids came in at £160,000 and because we wanted it we decided to go for £175,000,’ he said. ‘At that time it only meant an extra £20 or £30 a month on a mortgage. I had it valued soon after and was told it could make £225,000.’”

“Sean Williams, assistant manager of Hamptons in Pimlico, said Mr Conroy had been a victim of last year’s overheated market. ‘Things got rather silly last year. I am amazed there were even bidding wars going on for that property at that sort of level,’ Williams said.”

“As much as Kelly Moriarty and her daughter Riley love looking at flowers in their front yard, the family is still trying to sell their Eagle-Vail home. Living in a resort mountain community near Vail, the Moriarty’s thought housing prices there wouldn’t be affected by the national housing slump.”

“However, after putting their house on the market this winter, like many other homes in Eagle County, it has yet to sell. ‘Nothing is really moving,’ said Moriarty. ‘We started around $700,000 and dropped it to $685,000 and now when it’s by owner we dropped it down to $619,000.’”

“Now, the plan is get the home to sell faster so they can move nearer to family, preferably where there are still some flowers. ‘If we don’t have flowers were not going to do well,’ said Moriarty.”

“Why is it that nobody in Vancouver is willing to admit that housing prices are starting to drop? The growth cycle that housing has experienced over the last seven years is in no way sustainable, given the household income of people in Vancouver.”

“Personally, I put the blame on realtors for lulling everybody into a fantasy world in which home prices will always rise. There are countless cities where you can buy a beautiful 2,500-square-foot home for well under $400,000, while the same home in Vancouver would cost more than twice as much.”

“To all of the buyers out there in the market, please don’t make things worse. Don’t be afraid to under-bid. We’re no longer in a sellers’ market. Don’t let pressure from your realtor force you to pay prices from six months ago.”

“The former BBC economics editor Evan Davis said yesterday that journalists could have done more to warn the public about the credit crunch that triggered the current housing price crash.”

“Davis, now a presenter on BBC Radio 4’s Today, said the media may have helped to drive up the market by over-reporting statistics on rising house prices in the runup to the credit crunch crisis.”

“‘I do ask whether we did our best to warn people of impending problems during the upswing of the [economic] cycle,’ Davis said at the Radio Festival in Glasgow. ‘My line is, ‘My God, we tried’, but when everything is going well people don’t want to hear it.’”

“The rapid job growth that prompted thousands of families to move to Northwest Arkansas during the past several years has slowed significantly during the past year. It makes it harder to sell homes in an already weak real estate market.”

“‘We used to talk about how Northwest Arkansas was recession-proof or insulated from what happened nationally,’ Jeff Collins of Streetsmart Data Services said. ‘It’s just obviously not the case.’”

“‘Back in 2004 and 2005, we were noticing the disparity between supply and the number of houses that could be absorbed that could reasonably be absorbed,’ Collins said. ‘Some folks argued that the reason (for the region’s housing woes ) was because we were spreading bad news.’”

“America’s birthday party might be a little gloomy today. By many measures, it has not been a good year for her. She suffers from a bad economy brought on by a lingering housing crisis, lost jobs and rising unemployment.”

“Yet, it would be wrong of her not to celebrate. Today commemorates the birth of a grand experiment, the notion that people living in freedom are happier, more productive, more innovative, and better able to reach their potential.”

“America should draw comfort and hope from both its past and its present. She has overcome much greater problems before. And she has a wealth of resources to battle today’s.”

“The most important of those resources are her people and her freedom; a freedom that was declared 232 years ago today. No matter her predicament, America must always celebrate that.”

The Sacramento Bee reports from California. “It’s the question faced by thousands making peak 2005 loan payments on a home with 2008 values: Should I stay or should I go? In Antelope, Randy Fatius has had it. He says he’s walking away from the 1,200-square-foot house he bought in October 2005. Fatius made his last payment in March. Until April, he had never missed a payment.”

“‘I thought that was the best I could do with the situation,’ Fatius says.”

“The three-bedroom, two-bath home he bought for $312,000 with no money down is now worth $184,000, according to Zillow. But a slightly smaller house near him is listed at $125,000 and has been on the market for 119 days. Within a mile, he counts nearly 80 homes owned by banks or in varying states of foreclosure.”

“Walking away is embarrassing, Fatius admits. But staying is ’stupid,’ he says.”

“‘I crunched the numbers and it floored me,’ he says. He figures he’s lost around $200,000 in less than three years and that ‘it would take me 17 years to get back the value I’ve lost.’”

“He knows what he’s in for. ‘My credit score is going to tank,’ he says. But he thinks the penalty isn’t as bad as owning a house whose value has dropped so far below what he owes.”

“This was the first home Fatius bought. ‘I don’t think I’ll ever buy a house again,’ he says.”

“And, finally, don’t start in with him about standard advice to call his lender for help. He did, he says, and got no help that could have made much of a difference.”

“Looking back almost three years after buying, Fatius says, ‘I had a gut feeling from the beginning I shouldn’t have done it. I’ve felt it the whole time.’”

“Sacramento County has had almost 9,400 foreclosures so far this year.”

“Corner by corner, the gradual metamorphosis of Sacramento’s core continues to unfold, much as it has for the past decade. Downtown isn’t immune to market forces. Projects opening now were mostly started during the real estate boom - and were too far along to stop when the bottom fell out. Housing has been particularly hard hit.”

“Downtown developers say they’ve had to heavily discount their product to move it, and they’re making little, if any, profit these days.”

“‘This is a depression in real estate; everybody who was really flying high isn’t anymore,’ said developer Mark Friedman, who has sold 12 of his 26 Sutter Brownstones in midtown.”

The Mercury News. “Santa Clara County just closed a third straight year of slower growth in property values, Assessor Larry Stone said Thursday, as plunging starter-home prices undercut a booming market for commercial and industrial buildings.”

“Jef Tyler and his pregnant wife got a notice indicating the assessed value on the townhouse they bought two years ago in San Jose’s Japantown was being dropped $47,000 to $539,000. The declining value has forced them to delay their plans to trade up to a bigger home to make way for the baby.”

“Although Jef Tyler expects the tax break to be small, he said it’s at least a silver lining. ‘I guess it’s better than just saying, ‘Gee, we lost $40,000 on our house.’ Maybe we can get an extra tank of gas, or a half-tank.’”

The Bay Area Newsgroup. “AmeriDream Inc., a buyer assistance program…is now under fire in the U.S. Senate and the Department of Housing and Urban Development, which is proposing to get rid of the nonprofits - mainly AmeriDream and Nehemiah Corp. - that use money from the seller to pay FHA down payments or closing costs.”

“Jason Ellis bought a home in Tracy with AmeriDream, after looking for more than five years. The sole breadwinner in a family of four, he said, ‘There was no way we were going to be able to save 25 percent for a down payment. That would be $80,000 to $90,000 on a $300,000 house.’”

“Ellis said that his rent was rising so fast, from $1,400 to $1,800, he figured he should buy. ‘Rents were really getting out of hand,’ he said. ‘We were at the mercy of our landlord’s finances.’”

“They found one that was affordable, a four-bedroom house just under 2,000 square feet for $300,000. Ellis was able to put 3 percent down by liquidating his 401k, and used AmeriDream to pay 3 percent towards closing costs.”

“A few years ago Ellis said he was approved for a $750,000 house, an amount he said he could never afford. ‘The minimum payment was more than I made a month before taxes,’ he said.”

“Other loan agents promised up to $100,000 in cash-back financing. ‘We could have gone with a couple of brokers a few years ago who promised us the big dream but we would probably be in default right now,’ Hamilton said.”

The Recordnet. “William McClamy, with a family of 10 that includes a grandchild, is in a world of hurt and frustration as he has wrestled futilely to get a home mortgage loan modified so he and his family can stay in their Tracy home.”

‘He contacted the lender, Countrywide, when his adjustable-rate mortgage payment was about to jump $1,200 a month to $4,100 and was told the company couldn’t help, because he wasn’t behind on payments yet.”

“Seven months ago, he was in trouble and couldn’t make full payments and was passed from one Countrywide staffer to another to another. Still, nothing happened, he said. ‘We’re in limbo,’ he said. ‘We’re looking at foreclosure at any time now. They ignored us. They don’t care.’”

The St Helena Star. “At 55 percent, Napa County has suffered the sharpest decline in home prices among nine Bay Area counties. Notice of Trustee sales for the county rocketed to 359 in 2007 - three times what they were a year earlier, and five times what they were in 2000.”

“The 704 Notices of Default issued last year more than doubled the number issued in 2006 and were more than three times the total for the year 2000. So far this year, the numbers in both cases are on track to far exceed ‘07 totals.”

“To the south, both Napa and American Canyon are reeling. Stan Brody of Burlingame-based U.S. Mortgage Corporation, talked about a Web site he accessed listing 18 ‘comps’ in American Canyon.”

“‘They were all new homes built from 2002 on,’ he said. ‘Among them were three sales, 10 were bank-owned, the others were short sales.’”

“Just over the Lake County line to the north, a Hidden Valley Lake real estate broker’s ad states that out of 134 homes listed for sale, 42 are below $250,000, 28 are foreclosures and 15 are short sales.”

“No place has been more affected than San Joaquin County, said Brody, where 1,600 homes have been foreclosed upon and 22,000 are in one stage or another of default. ‘In Stockton, we closed escrow for $197,000 on a property that sold previously for $550,000,’ he added.”

“Still, the Upper Valley is not totally immune from the effects of the massive downturn. ‘Any kind of a decline is a shock to sellers here,’ added Skip Lane of Town and Country Real Estate. ‘They just assume that prices will go up and they haven’t in the past year or so.’”

“Home sales in the Upvalley are affected by stock market fluctuations, said Brody. ‘Well, guess what. The stock market has this whole fear thing going, too,’ he said.”

“Brody believes that modifications by lending institutions providing some form of mortgage relief may ultimately be the only way out of the real estate mess.”

“‘Right now, you have Senator (Christopher J.) Dodd who wants to put out $200 million for foreclosure counseling,’ Brody added. ‘My question is, what are you going to counsel these people on? How to pack boxes so they can move out for the foreclosure sale?’”

New Times SLO. “Like a series of beached whales, each more decayed and skeletal than the one before, the buildings line the hillside behind Broad Street in SLO. Torn plastic building wrap flaps in the breeze and an incomplete wire fence dissuades, but does not prevent, would-be trespassers from exploring the buildings.”

“City documents show the project on Rockview Place, which began in 2005, was envisioned as nine condos that would fetch as much as $6 million when sold.”

“But running into foundation problems, among other concerns, work on the steep hillside project was stop-and-go for most of its history and for the past year work has entirely ceased. Now it’s been formally declared ‘abandoned’ by city planners.”

“‘We’ve asked that he put in fencing and that he keep a daily log showing that he’s at the site and that he’s keeping the vagrants out,’ said Tim Girvin, SLO’s chief building official. ‘You’ve got an unprotected structure there; you don’t want people coming in and setting fires to warm themselves, or doing something else that results in the place burning down.’”

“For now, Girvin said, the developer has been responding to most city requests, but has emphasized that no significant work can happen until he gets new funding.”

“‘The problem is, it’s trying to get blood out of a turnip,’ Girvin said. ‘How can you put these financial requirements out on a project where the guy’s got no money to move forward?’”

“So for now, he said, while the city could legally seek to have the project razed, instead officials are waiting for the results of…court actions. ‘We’re kind of treading water,’ Girvin acknowledged.”

The Daily Bulletin. “It’s a buyer’s market out there. Real estate agent Javier Sanchez has had a 1,400-square-foot Montclair home on the market for just a week, and already he has had several offers.”

“Sanchez said the owner of the house, a short-sale, had enough equity in the home to lower the price to $245,000, but he’s going to walk away with nothing. Sanchez said he’s seen a lot of changes in the market, with people struggling to pay their mortgages.”

“‘Most people are are pulling the equity from their home to make those payments but in the end they can barely afford it,’ he said.”

“Sanchez said there are 120 houses within a two-mile radius of the Camarena property with owners who are 90 days behind on their mortgage payments. There are 17 other houses with mortgages that are 120 days past due and will be repossessed within the next 30 days.”

“In the past 12 months, Sanchez said, 102 homes have been repossessed within two miles of the home.”

“‘(The former homeowners’) mortgages were too high, they got tied up in the middle of the sub-prime loans, and they just didn’t have their equity to fall (back) on,’ he said.”

“The glut of short-sale and foreclosed homes is making this the ideal time to buy, some experts say. For those looking to unload property, a little patience is probably in order.”

“‘Those who are trying to sell their home with equity can’t because there are already too many homes in the market,’ Sanchez said. ‘My advice to them is stay in their home until the market gets better.’”

The Press Enterprise. “A Beverly Hills home builder has purchased 163 finished residential lots in Victorville…from Pulte Homes Inc, in hopes that the High Desert residential market will rebound during the next few years.”

“Similar land sales have become common in the High Desert recently, according to one home builder familiar with the market. Rollie Heschong, founder and president of High Desert Homes in Joshua Tree, said lack of business caused him last fall to shut down the company temporarily.”

“‘In a year or two I think High Desert might come back, but for now the ’spec’ housing market up here has dried up,’ said Heschong, who now builds custom homes.”

“Kennedy Wilson Residential plans to develop their new lots after the housing market turns around or sell them to another home builder if the market is still stagnant three years from now, said managing director Eric Taylor.”

“Cost of the land, in the Cypress Pointe community about a half-mile from Interstate 15, was not disclosed.”

The Berkeley Daily Planet. “Berkeley City Council members seem to think that there’s an infinite demand for brand new condo bunkers, despite numerous warnings over the years about the housing bubble.”

“New condos seem to have hit a wall. Two massive projects opened around the beginning of this year, both on ‘transit corridors.’ During construction, a large sign announced that 1801 Shattuck would be condominiums. The website still boasts that it will be ‘the first major Condo development in the Gourmet Ghetto in over a decade.’”

“The project opened without fanfare in early spring-as rentals. The apartments are being advertised with great enthusiasm: ‘1 Month FREE-HURRY-Rent Special! Hurry Ends Sunday!’ (This ad has been running for weeks, so I surmise that the special offer expires on Sunday and is revived on Monday).”

“The project at 2700 San Pablo is another story. Newspaper ads for the condos began in December 2007 with a catchy new project name.When I attended an open house tour, only two units seemed to be complete.”

“In late February 2008, mechanics’ liens against the property began appearing at the Alameda County Recorder’s Office, eventually totaling 49 liens filed. The amount still owed to contractors is approximately $1,036,468.”

“The two completed units at 2700 San Pablo, 210 and 406, were advertised vigorously until early May, when advertising ceased. Number of condominium sales recorded: Zero. On June 2 a Notice of Default was filed at the Recorder’s Office. The construction loan of approximately $9.5 million appears to be in arrears.”

“Why are the councilmembers so condo-crazed? All I can figure is that they are following their leader, Mayor Bates, whose campaign contributors include a long list of developers (and their wives and employees). It is rumored that the only job Bates has ever held other than politician was-commercial real estate broker.”

I’ll forward this thread through the 4th of July. Here are some predictions from the end of 2007. “rob: i predict that 2008 is when the housing bubble outside the US starts to deflate. This includes Canada, Mexico, UK, Spain, and others. The rest of the world is still in ‘it’s different here’ denial, but in the end, economic principals suggest that while everywhere is ‘different,’ nowhere is really that different when it comes to over-valued and over-build housing markets.”

“This will cause the world-wide credit crunch to be more severe, as borrowers in other parts of the world start defaulting like their US cousins.”

“crispy&cole: I predict prices down nationally another 5-10%, inventory increases and a minor rescession in 2008, 2009 will be the worse…”

“FB wants a do over: Realtors will continue spouting the bottom was just reached - all throughout the year.”

“oxide: 1. I predict that the real ‘affordable housing” is going to be re-partmented condos, or condos at fire sale prices. Condos were late to the party so they can hang on a little longer, but they too will crash. Right around next Halloween.”

“2. I predict I will NOT buy a house in 2008. I thought I would, but I’m just not as interested yet. 3. I predict that at least one bailout bill will make it to the floor of either House of Congress to pander to voters, but will die there.”

“4. At least one mid-size bank, one major builder, and one major loan originator will give up on taking on new debt, and do the business version of jingle mail.”

“dennis: I predict the Stock Market below 12,000 by June. It will get ugly as panic sets in when the FEd is unable to control the pundits on wall street.”

“LILLL: I predict that the MSM will still deny that we are in a recession. Home prices in SoCal willfall off a cliff and nobody will ever again have to promise to feed the squirrels. Credit will get crunchier.”

“I will buy a repo SFH cheaper than a condo with 25% down Shendiand live happily ever after. I will start lowballing early summer. I’ll buy for under 400k in the SFV. I shall share my journey with HBB. Happy New Year All!”

“Shendi: Some MSMs will lose market share due to people shunning the misleading, incomplete and shill type articles on the state of RE. Eventually some will die a slow death due to lack of RE ads Increase in divorce rate. Increase in obesity and health related issues for the paycheck to paycheck families.”

“cayo_ron: Increase in bubble-related violence, i.e. multiple shootings/suicides.”

“em3: Rates of sales decline will taper off in the next few months into a more or less static number of sales nationwide; that constant won’t change much for a long time out. Prices, however, are going to continue to fall for many years to come (more than 10). Vulture fund money will try to catch knives by buying improved land this year.”

“A few smaller banks go belly up in ‘08, but none of the major banks-some of which rather will see more receipt of multi-billion dollar infusions of cash from a trusting middle-east and east.”

“The big story of 2008, however, is non-construction, non-manufacturing layoffs-in finance, banking, automotive, government, some academia.”

“barnaby33: I predict we’re already in recession, especially counting for inflation. We will continue to see inflation and deflation at the same time depending on what you are looking at. The worst of the housing declines will occur late in 08 as the banks are loaded to the gills and see the next wave building, at the same time that credit is getting harder to come by.”

“BayAreaRog: Inventory swells in late January. Normal sellers who’d been waiting out the holiday season + a few FBs. Buyers drink the RE agent Kool-Aid and start trying to buy again, but can’t get loans. Expect lots of aborted escrows in March. Good buyers with money can still buy, so sales volume goes up temporarily and median price plateaus or inches up.”

“Spring brings a huge wave of FB listings due to ARM resets. Early ‘08 listings still haven’t sold. By May, inventory spikes to ‘unprecedented levels.’ Leslie Appleton-Young calls this ‘the best buyer’s market in history.’”

“Through September, sellers and REO-rich banks still act as if it’s early 2006 and don’t budge much on prices. True lowball offers (20% or more off asking price) still get rejected, by and large. Would-be buyers finally realize foreclosures and REOs aren’t better deals than regular listings and lose interest. Inventory keeps growing.”

“Groundhogday: We’ll see builders drastically undercutting the existing home market through 2008 and competing with bank foreclosures.”

“It will be almost impossible for anyone to get a home loan by the end of 2008. Even Fannie and Freddie will struggle to securitize mortgages. FHA might be the only game in town, but not a game that will support even slightly bubbly prices due to tight lending guidelines.”

“SDGreg: One of the stories for 2008 and especially 2009 will be one of increasing fiscal problems for state and local governments. It will be evident by the end of 2008 that the current fiscal problems in California, which will eventually seem minor in comparison, will be increasingly severe in the two years that follow.”

“JimmyB: The big story of 2008 will be the mass extinction of homebuilders. A huge majority will go BK as sales continue to fall, margins are zero or negative, and mass over-capacity becomes painfully obvious.”

“stanleyjohnson: I predict no matter how bad things are in RE Larry Kuntlow, Bob Pisani, Tom Atkins, NAR, CAR and Babara Corcoran will all say it is a buyers market, so buy now.”

“cactus: Recession in 2008 and the FED will continue to lower interest rates down to 3.5%. Stock market will go down 10-20%. Home prices will fall 10%-20%. US dollar will trend lower against other currencies especially fast growing Asian countries. Commodities will go up against the US Dollar. RE agents and Loan brokers will be mocked and parodied often in 2008.”

“Ouro Verde: I think that so much happened last year that the worst is already here. From here on out will be a few years of ‘working out the kinks.’ The only thing that hasn’t happened is drastic price reductions and we may never see that in SoCal.”

“combotechie: It will be revealed that EVERYONE saw the coming decline, that it was so obvious only a blind fool could have missed it. The absolute, final, solid, rock-bottom prices in RE will be reached many times in 2008 and into 2009. Cash will be scarce, debt expensive. The American people will begin saving money.”

“jbunniii: Call me crazy, but I think that in 2008, the Bay Area will finally crack. I predict at least 10% YOY median price declines in San Francisco, Marin, San Mateo, and Santa Clara counties.”

“janna: I just have one little prediction for 2008, though I think it could be 2009 or 2010 even before it happens. I think that local sheriffs will stop enforcing evictions for foreclosed borrowers. I think the volume will so grow so large, that they will be overburdened and seek to charge fees to the lender.”

“In addition, I think the pushback will be so fierce, that in some municipalities and counties, the departments will decide that the task poses too much risk to their officers. There will either be indefinite squatting, or private enforcers of the blackwater type enforcing evictions, as they do not have to be voted into office as many sheriffs have to be.”

“vozworth: Multiple municipality bankruptcies…. runs on non-depository institutions continues…”

“Curt: I predict 2008 will be exactly like 2007…….only much worse.”

“johnbanner: I predict Gary Watts will get hired by Burger King in May. After 2 weeks on the job, the manager will fire him for lying to customers about the weight of the all beef patties.”

Please post off-topic ideas, links and Craigslist finds here.