I think by the end of this year it should be a little bit more clear how this market will play out. It seems we are all walking through the fog right now. I haven’t seen any thing of real substance to change my bearish stance. The reason for that is the back drop of this market. Many of my primary concerns seem to be unfolding right now. The unwinding of the yen carry trade, the implosion of sub prime lending, the steady trickle now running stream of foreclosures. All of these things are working against the market and I don’t see many of these trends improving as far as the eye can see.

It will be the inevitable economic slowdown that will have the biggest impact on housing. We haven’t entered that stage just yet. A recession or even a near recession will reduce demand, home prices as pointed out by this blog and many others are still disconnected from traditional fundamentals, the source of liquidity that made recent home appreciation possible is drying up, and we see the rumbling of NOD’s and foreclosures as these exotic loans reset. As many pointed out the past couple of years this is a slow process due to the nature of homes verses stocks. In my mind nothing has really changed.