Some excerpts...
"But the problems for new and existing home sales are in the future. Last year there were 400,000 foreclosures. Economy.com (Moody's) estimates that that number will double in 2007. That means that there will be an additional 800,000 homes added to the supply of existing homes this year, which is at a seasonally adjusted 6.69 million homes."
And
"A 20% Drop in the Number of Home Buyers
Now, here is where it gets rather ugly. Warning: remove sharp objects from your vicinity before reading further....
"Aggregating the various impacts would result in a 35-45% drop-off in new starts from the peak of 2.1 million homes to roughly 1.2-1.4 million, as compared to the 16% decrease thus far on a trailing twelve month basis. For comparison, starts during the last three downturns ending in 1991 (down 34%), 1982 (down 32%) and 1980 (down 37%) fell by an average of 34%."
A drop of 20% in the number of homebuyers that we have seen in the past two years, coupled with a dramatic increase in the number of foreclosures, is going to put serious pressure on housing prices, especially in markets where there was a lot of "froth." And combine that with increased down payments and tighter credit for even credit-worthy buyers, and there is real room for concern.
And...
In short, I think the case for a recession can still be made. And of course, there are those who think it will get even worse. Take Professor Nouriel Roubini of the Stern School of Business, New York University:
"Indeed, the subprime meltdown is now spreading to other parts of the mortgage and credit markets: near prime and risky mortgages (option ARMS) are now in trouble and they accounted for over 50% of mortgage originations in 2005-2006; subprime auto loans and subprime credit cards are in trouble; bank loans to home builders are in trouble; and bank lending to non-residential construction will soon also show cracks as the CMBX - the indices showing the cost of insuring against commercial real estate default - has sharply fallen, signaling a much higher risk of default even in this market segment.
And....
"We were sent an article yesterday from Yahoo! News detailing the levels to which housing prices in Detroit have fallen, and they have fallen very far indeed. Apparently last week, a Texas auction firm was commissioned to sell off a number of homes there. The prices were unbelievably cheap, with 'house after house [selling] for less than the $29,000 that it costs to buy the average new car.' The auctioneer became so exercised that he enjoined the audience with the simple statement that 'Folks, the ground underneath the house goes with it. You do know that, right?' Several houses that went by the boards sold for less than $10,000... some even for less than $7,000. As one participant said, 'You cannot even buy a good used car for that!'
And...
"MCCABE: We haven't seen the effect that we're going to see later this year and into 2008, the mass foreclosures that we're expecting. And also where lenders are going to be taking back projects from developers and in many cases hedge funds and investment asset groups are going to step in to buy those assets at highly discounted prices."
http://www.safehaven...rticle-7211.htm
"However, there is no reason to trade the market based on a picture of housing..."
Unit sales are up year over year here, and prices are going up... 
This presidential cycle is about done, and there always seems to be weakness in stocks toward the end of the 8 year presidencies(87 crash, 98 Asian Contagion) 
Overall though, every day that goes by now is looking forward to a new cycle... Heck the Campaigns have already started... with a few changes too, like CA voting early instead of late.
I see some signs in Silicon Valley of bottoming too. 
It's always the darkest just before dawn... 
