bsrsharam-
good points, and I agree that wealth effect will reduce spending, but its probably spending that shouldn’t have been going on in the first place.

My frustration is that for years we pay lip service to the fact that we want the “middle class” and “public servants”- teachers, police officers, military personnel- to be able to buy a house in the communities in which they work.

The answer to this problem to date has been building 50 or 100 income restricted units a year, which clearly is next to useless.

Now, falling prices might make this possible again- a teacher’s salary might be enough to buy a house, like it was for my wife in 1996 (I married into San Diego housing wealth).

Instead of the next housing article featuring someone whining about how their loan officer lied to them and now they can’t afford their house, I want the reporter to talk to a local cop or local teacher who has been renting- or commuting absurd distances- who is now thinks they may actually be able to buy in the community in which they work.
Heck- I don’t know many reporters who make enough to afford a house in San Diego. They could just interview themselves and make my point.