I had an argument with this jerk investment financial advisor partner at a large brokerage firm recently who does not believe real estate in San Diego will go down. He kept saying it will flatten out and be a soft landing not a crash.

well, it is still the majority opinion that if prices slide it’s not going to be more than 5% at most. When I make the case that prices will indeed fall upto 40% I get laughed at. Yes, we’ve had a 125% appreciation, unprecedented in history so I don’t know why it’s so hard to believe that an equally unprecedented downturn cannot take place?

Homeowners are in absolute denial because for many people a big decline in values is going to reduce their net worth to nothing and that is too much for them to digest.

They would like to believe that they are so financially savvy for having bought a home that created so much wealth when infact they are financially illiterate and cannot comprehend the fact that RE market is cyclical and has always been like that.

In the early 90s prices went down 30-35%, this time it is far worse with so many more aggravating factors (excessive home equity borrowing, exotic lending, speculators etc.).