Bugs,
Sounds like The Perfect Storm of bad sales data, rising foreclosures and negative media heading into seasonal slowness. All a very realistic scenario. My difficulty, which SD R no doubt shares, is seeing homesellers actually radically adjust their expectations so quickly. People hate change and resist it at all costs. Would that perfect Storm be enough to get them to do so? I just cant see it.

As for the homebuilders, they would definitely be the first to jump ship!