[daepp]

Housing in So. Cal. went up 20% per year for years. These were unreasonable gains. Those who bought to hold/own should be ok.

The problems, IMO, are confined to those who bought houses they couldn't afford and/or with loans they couldn't service.

My example: Pd. 320k in '98. In '06 surrounding homes were selling for the low 800K's. Even if the prices fall 50% from their peak (which I think is overly pessimistic), the house is still worth 25% more than I paid for it. And I do not think that my case is that far out of the norm.

If you bought in '06, and paid 800, and could afford the house/loan, and prices fall, you'll be stuck there for a few years. But then, that's what 90-93 was like around here.

However, if you were stupid enough to borrow out all of your equity, or for whatever reason entered into creative financing that you can no longer afford, then you are gonna have some trouble. But isn't that always the case with financial transactions?

The only buyers in this recent run-up in values should have been those who could afford traditional financing. I know plenty who bought modest homes in the I.E. who did not get to experience the huge value increases, but who are also going to make it through this downturn because they were neither greedy nor stupid.

My $.02.