This boom (bubble) is bigger then the previous one in LA. Real Dollar declines will be more the 30% let's try 40- 50%.

If you recall, the housing bust in SCal in the early 90s was a highly local affair, exaggerated by the massive shut down of aerospace in the region. Not to say that there is not a housing bubble or that prices will not decline, but the periods are not really comparable - for LA or the country as a whole - in my view.

A big difference with the early 1990s housing bust is that mortgage rates were falling during that time helping to cushion the fall in house prices.

This time mortgage rates are rising which should worsen house price declines.

Around 1981 we saw a drop of almost fifty percent in one year here in vancouver. That was of course a time of extremely high interest rates.

I still think there needs to be a catalyst to get most folks to sell their homes. Specifically, job losses. Right now, the nation is at full employment with unemployment at 4.6%. The economy is moderating, but GDP is still supposed to be around 3%. Wages are picking up a little, too.

In the 1990's there were lots of military base closures that contributed to the housing decline in some areas. Esp in CA.

If you look at the numbers, real prices have already fallen 8%-10% since November.
Houses are unaffordable at current prices. Without the promise that they will increase in value, most people cannot pay 50% or more of there income on a home.
High inventory, no buyers. How do prices not plummet.
I see a correction of 50% to 70%.

Re Harms point about 50% of the jobs created in the past 5 years, I think this is one of the scarier aspects of the bubble.

The economy has become too heavily dependant on housing. Remove this support and it will get a whole lot uglier as the whole thing unravels.

Just as the Zaibatsu exacerbated the burst of the Japanese bubble economy, the housing bubble will cause untold pain.

Just imagine what things would be like if we took away the easy money for a little while...

Have we ever had an economic contraction during a war?

Is this war like other wars?

I don't know ... I think we have at least another year to go before a recession. And I think the Fed has a ways to go, too, to finally complete it's mercy killing.

While I'm making predictions ... I think this recession will be at least as deep as the early nineties.

The 'riot' you see this time will not be based in south central- but those trying to sell their vastly overpriced homes, and banks running for cover- worse then the riots of 1992.

Let's forget about what asset class we are talking about for a minute. If you were looking at a chart of an asset class that's returns have shot through the roof in the last few years with no supporting fundamentals (this case housing returns), wouldn't it be obvious that this trend is due for a serious correction? To make matters worse, housing is far more illiquid than stocks which could potentially create a worse correction than anticipated. People will do anything they can to unload a property if they are in a panic, even if the sales price is 50% less than the purchase price.

I really think Thornburg has it wrong here.

Didn't the economy contract during the Gulf War? The latter half of Vietnam?

The 'favors' were supposedly going with some realtors in Coachella,California while they waited for the sale as part of the transaction. Don't know the names.

I don't know if it is true, but I wouldn't be surprised.