As has been pointed out several times on this blog and others, the primary difference between this downturn and the last is that this downturn is coming from a credit debacle verses a severe downturn in employment. I don’t know but I would speculate that the higher end neighborhoods were being hit harder at this stage of the cycle in the last downturn than they are currently. If you lost your high paying aerospace job, then your house in your nice neighborhood went on the market very soon afterwards. That has been missing from this correction thus far and is why the higher end neighborhoods seem to be holding their ground.

How this correction plays out from what appears to be starting from the bottom up is going to be the fundamental difference between the two. Nationally we have about $500 billion in ARM resets in 2007 and about $700 billion in 2008. We are half way through this year and how many subprime lenders got whacked already? We are approaching record defaults and foreclosures, and the credit markets are getting the first whiffs of contagion with the Bear Stearns failures. This set of circumstances did not exist during the last downturn. At this point I have to admit I have no idea which downturn will be worse.