BW,
I would argue that housing is a little different than a tulip bulb. The falling median home price is greatly attributed to plummeting prices in CA, FLA, Michigan(which is likely close to bottoming) and Las Vegas. The first 2 candidates on my list will carry a lot of the brunt of the decline in the median home price. If in 2005 a 700K house in Bakersfield goes for 550 in 2008, that's not only a 21% decline in price, but 150K off in value when weighting median home prices in the US.
With the demise of the 100% loan, watch for house prices to continue to fall in lower income urban area such a the southside of Chicago for example. An 80K house there 10 years ago is now or was going for 220-250K. And we are not talking about a good area, so the neighborhood is not going to attract buyers with sizeable down payments. Transactions in those areas where heavily dependent on 100% financing.
My point is that few areas will be immune from the housing slowdown and subsequent contraction, but certain geographic areas and sub areas are going to carry the burden of price declines. For the rest I expect house prices to decline 5% or so or to just being flat for a couple of years as wages catch up to offset the high price of housing. The CA market was exceptionally dependent on interest only and negative amortization loans. I don't have a problem with I/O loans, but neg am loans are a bomb and a half waiting to happen to a buyer, especially when values are anything but skyrocketing. They(CA) are going to have an extended contraction there IMO.
The basic elimination of W-2 stated wage earner loans will hit the minority communities especially hard as many of these borrowers are mutliple income households with undeclared income or undeclared legal status or whatever. That describes a lot of urban areas in this country. I am ultimately praying that leaves me relatively isolated from the issue, but we will see.
AI
Market Data 
Markets 
