chip_designer interesting post that you made. It has a tinge of bitterness in it. Personally I consider myself somewhat of a moderate bear compared to most of the posters here.

I think that bob2007 touches on what I believe will be distinct uniqueness about this next downtrend, (of which we are already well into)… That is I believe we will see a more profound effect on certain areas then others. We are already seeing that now. Downtown condos are still getting hammered. Even in the midst of this spring rally. Yet neighborhoods like Scripps, and north county coastal are seeing brisk activity. Again, areas that were subject to heavy speculation, relatively risky financing, and other extraneous factors will be subject to wider depreciation…IMO.

Now yes if what you posted IS TRUE, that even with 100% financing, homeowners in say 4s or Carmel Valley can afford the payments, then yes, those homes will depreciate at a slower rate… However, if you compare that local system to a neighborhood that may not have the same property values but is much older with the majority of the homeowners having larger equity stakes, then I believe those older neighborhoods will hold up better simply because the owners are more inclined to ride out the bad years at a much lower cost.

I feel your assumptions break down very rapidly for a variety of reasons such as divorce, maybe one of the wage earners decides to have a baby and stop working, job displacement, relocation… It seems to me that there are variables that you are conveniently ignoring.

So getting back to my point, I think this secular downtrend will see substantial depreciations in lower income neighborhoods, (this due to the tightening of lending standards), many condos, and areas that had large speculative investments. Areas that have nice schools, and are desireable such that families want to raise thier kids there, and they are in decent locations, may depreciate as well but not as much IMO. Again, ASSUMING that these people can continue to make thier mtg payments, property taxes and mello roos. As for high end stuff…. well I guess we will see. I do agree that one major underestimation of many on this site is that there is a vast number of people out there with ALOT of money. Whether they buy a home for themselves, thier kids, or whatever, they will continue to do this. However these people are also smart and I don’t think they and they alone will prop up the entire market of higher end property.