Dan seemed pretty good, except he didn’t acknowledge the rampant price drops, and return to 2004 and 2005 values. His version of the story is that price drops are merely sellers who had overpriced their homes, thinking they were worth more. An interesting point he made is that 100% financing is more likely to cause foreclosures, because the borrower has nothing to lose by walking away. How many 100% financing loans are coming due in the next few years for adjustment?

Why did Shiller say twice that he wasn’t sure if prices would go down? Is he trying to balance the one-sided trades on his futures index, or was he always cautious about predicting price movements? He emphasized psychology as the driver of prices. What factor triggers a change in psychology? Shiller said it’s hard to identify a trigger; we still don’t know what triggered the 1929 and 1987 crashes.

A realtor from the Bay Area said some very good homes are selling for 4-5% off.

NAR economist Lawrence Yun was straight forward about the declining market. He used a new term: sudden transition. He warned the Fed that further increases in interest rates could tip the economy into recession, due to its damping effect on MEW.