EclectEcon

As things stands now, we think there is at least
a 50% to 75% probability that a North American
housing downturn will devolve into a grinding
bottom of 2 years or more. It’s true that the onset
of a real estate slump has been quite rapid to
date. That all the more argues for heavy
responses soon.

... Are we witnessing the
first innings of a classical housing bust or not? We
believe the answer is “yes.” However, that said, this
downturn will not go uncontested. Yet, all the same
the excesses are simply monumental. It will not be
easy to re-ignite the housing mania.

... Housing Bubble Has Started its Decline. We
anticipate that there will be a strong response
from the Fed as this development gains
momentum … at some point likely no later than
early 2007, and very possibly much sooner.
Undoubtedly, the North American housing bubble
has begun to deflate. This sets a key backdrop to
the economic and financial outlook over the next
18 months to several years.