At NewsWEEK: The Worrying Housing Bust … The danger: a 2007 recession.,

We are at the endgame for housing. Until recently, our national motto has been “in real estate we trust.” Just last week, the Census Bureau reported that median home prices after inflation rose 32 percent from 2000 to 2005. In some places, the gains were huge: 127 percent in San Diego, 110 percent in Los Angeles and 79 percent in New York. But real estate—which has acted as a national piggy bank, with homeowners borrowing and spending against rising house prices—no longer looks so trustworthy. On this, more than falling oil prices or a record Dow, hangs the economy’s immediate fate.
[. . .] Construction workers, real estate agents and mortgage bankers will lose jobs. Consumer spending (computers, cars, vacations) will also suffer, as the borrowing and buying against rising real-estate values subsides. Indeed, the end of the cheap credit that fed the boom means that many borrowers will face higher monthly payments.

Fox News: Real Estate: House of Cards or Dose of Reality?
Boston: Fear and anxiety in the housing market:

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It hasn’t even started yet, and they use the ‘D’-word: Housing Prices to Drop, Report Says,

Housing prices, slumping after a five-year boom, are projected to decline in more than 100 of the nation’s metropolitan areas…
… The … firm projects that the median sales price for an existing home will decline in 2007 by 3.6%, which would be the first nationwide decline for an entire year in home prices since the Great Depression of the 1930s. [emphasis added]

This forecast is widely reported, which means that it will be seen by buyers and sellers, and will cause them to adjust their expectations.
Along those lines, a warning to UK investors: US housing market ‘in danger zone’,

British investors who own property in the United States should take a long-term view on the market and focus on maximising rental income as the US teeters on the brink of a housing market price reversal, says Assetz.
… Stuart Law, managing director of Assetz, said: “The U.S. is definitely in the danger zone but we are not currently certain how severe the downturn will be. Holiday home buyers who are getting regular use out of their property are unlikely to be affected in the long term, but investors who were hoping to sell their property on quickly are no longer set to gain and are likely to face losses if they sell now.

Think UK investors will be showing up to pick up some of that excess inventory and bail us out? Me, neither.
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The slowdown in the housing market is already affecting the sales of pickup trucks. Housing slowdown brakes pickup sales | Chicago Tribune,

General Motors Corp., Toyota Motor Corp. and Ford Motor Co., the world’s three largest automakers, are discovering that a housing slump can do what record fuel prices couldn’t: cripple demand for pickup trucks.
From 1995-2005, sales of full-size pickups surged 46 percent as home builders bought them for work-related projects and consumers followed suit.
But sales are down 14 percent this year, hurt by a housing slowdown that caused existing-home prices to drop for the first time in 11 years last month.

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Glut of unsold homes pummels U.S. housing – Some economists fear worst may lie ahead,

The long-predicted correction in U.S. housing prices has apparently begun.
The median selling price fell for the first time in 11 years last month, on an annual basis, pushed lower by the largest glut of unsold homes since 1993, and some economists fear the worst may lie ahead.
The price fall comes amid concerns that the U.S. housing slump could quickly spread to other areas of the economy as consumers react to the falling value of their nest eggs. In recent years, homeowners have used the equity built up in their homes to finance their lifestyles. A U.S. downturn now could also spill over into dependent economies, including Canada’s.

But wait, there’s more!
Analyst says of new data: ‘Pop goes housing bubble’,

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One economist calls the popping bubble “the house of horrors.” Use caution when trying to counter housing downturn

Merrill Lynch economist David Rosenberg calls it “the House of Horrors.”
He’s referring to his fear that a plunging housing market could turn even uglier, taking the breath out of the economy and the stock market.
… He was fretting about foreclosures nationwide surging 53 percent year-on-year in August. He was pointing out that while many adjustable-rate mortgages have yet to move upward, already the Homeownership Preservation Foundation is receiving a record number of calls from borrowers seeking help.
Whether the housing downturn will still allow a so-called soft landing for the economy or yank the shopping instinct out of the American consumer remains to be seen.

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