Is disaster brewing?

One can only wonder what the outcome of this stupid housing bubble will be. It felt so good for the bulls and cheerleaders from 2003-2005. But things seem to be turning rapidly. Inventory in my part of Bergen County has skyrocketed, as many refuse to face the new reality of falling prices. If one was to use a Biblical allegory, I am not sure if it is the story of Noah or the story of Joseph. Do we have and Ark sufficiently large to ride out this storm? Have we prepared in times of plenty for times of famine? I am affraid that we may not be prepared for the ensuing difficulties. All of our credit cards are maxed out, we financed our over priced homes with Arms, or worse, and we have no net national savings. When hard times hit, as they alway do, what will happen? I see a lot of pain ahead for all. I pray we can get through it.

Current state of affairs.

It's obvious that the housing bubble is slowly deflating. Record inventories on top of increased, though historically low, interest rates have spelled doom for the market. The only real question is to what degree prices will fall and over what length of time. I am sure that all the mandarins at the fed are closerly monitoring the situation. It seem somewhat surreal that our government is so obsessed with real estate prices, but I suppose it is just the zeitgist of the times. Legacy to Big Al. It's obviously impossible to predict the amount of housing deflation that will occur. Predictions range from no absolute losses to 50-60% in some "hot" areas. There are just too many variables, as well as unforseen events to make an accurate prediction, in my opinion. I am going with a middle of the road 20-30% absolute reduction in prices. I am not a big fan of high real estate prices. I think it's bad for business as well as for families. It's obviously been a disaster in terms of net national savings and personal debt loads. I am just hoping for an "orderly" adjustment. i.e. no bread/soup lines or mass unemployment. I look forward to the day to when this country can back to the business of business.