Housing Bubble Update

By Kevin Drum

(Political Animal)  HOUSING BUBBLE UPDATE....Last year I speculated that when the housing bubble burst, prices would decline by 10-20%, with the high end of that range being more likely than the low end. Aside from fellow bubble pessimists, most people at the time thought that seemed pretty ridiculous. But here's what the LA Times says today:

No one knows how severe the slump will be, but economists and real estate experts interviewed by The Times, and who were willing to make predictions, said prices could fall 15% to 25% before turning back up.

Most said values would continue falling through at least next year, and some thought the market wouldn't reverse course until 2010.

....Leamer and Thornberg are among the most bearish of analysts, saying the recently ended housing boom pushed prices out of sync with incomes...."Southern California prices will fall 25% from their peak and won't find their bottom until the end of 2009," Thornberg said. Leamer also sees a drop-off at the high end of the range — 20% to 25% — and sees the downturn lasting into 2010.

Yuck, yuck, yuck. This is really not going to be pretty.