I'd be a liar and BS artist if I laid any claim to how it will end up. Every week that passes brings a new and very unpleasant development. The banks have not been forthcoming - they keep dribbling the bad news out, a little bit here, a bit more three to five weeks later. How the bank CEO's and CFO's aren't being arrested under Sarbanes-Oxley, I have NO idea.

I've said before that I do think the US economy will be in recession by the end of summer, 2008. I base that on the consumer being 65% of the US GDP, and housing valuations continuing to drop all the way from now until at least a year from now. This will cut off home equity lines of credit, which will shut down a pretty big component of consumer spending. I base the "end" of the housing pricing deflation on the end of the loans that will be resetting and supplying the market with wave after wave of new defaults.

But I could be completely wrong about that if a deflationary spiral gets going. I'm looking only at primary effect data.

The valuations in the real estate markets? I have no idea how bad it will get. In Nevada's urban areas (Vegas & Reno) things are getting very ugly. In Wyoming, not so much, because they have their own oil/gas/coal/uranium boom market there propping up housing up to about $300K in price.

Real estate markets are local, and I can't talk to what I don't know, and I don't know much outside Nevada, Wyoming, some areas of California, Arizona and Idaho. The midwest especially, I know nothing about.

One thing to keep in mind tho - the National Ass'n of Realtors is a pack of liars (and fools) and no one should believe a word they say about when "the bottom" is in. You simply must get out there and look for yourself. Talk to property assessors and real estate appraisers. Here's a tip I learned from buying that house up in Sheridan: If you pay for an appraisal yourself (NOT for the mortgage lender, but you pay the appraiser yourself, directly, for an appraisal for you, directly), you can get all kinds of useful information out of him/her. The 20 minutes I spent with our appraiser in Sheridan was worth every penny of the $600 we paid him for his time.