Is The Housing Market Still Heading For A Bust?

Serious analysts across the political spectrum are coming to the same conclusion: the housing market is set to crash, and with it, the economy.

2 minute read

February 10, 2007, 9:00 AM PST

By Michael Dudley


"[T]he housing bubble is not a conspiracy theory and there's overwhelming proof that the aftershocks will be excruciating. Don't forget, the 'happy talk' in the real estate section of the newspaper is designed to soothe jittery nerves and help sales, not give the reader an accurate picture of a market which is sinking quickly."

"In fact, the hoopla over the 'rise in new homes sales' ignores the 'real' story which appears in many of the same articles; that is, 'In 2006 existing home sales declined by 8.4%, the biggest drop in 17 years, and new homes sales fell by a whopping 17.3%, the largest in 16 years'. This is the real scoop although it is predictably hidden in the fine print. It signals the beginning of a long, downward spiral which will increase unemployment, shrink GDP, and send millions of homeowners into foreclosure and out onto the streets."

"The signs of a major economic downturn are everywhere for those who chose to look beyond the cheery predictions in the real estate section of the news."

"Next year, an estimated $1 trillion of ARMs (Adjustable Rate Mortgages) are due to 'reset' which will cause stiff increases in monthly mortgage payments. We're bound to see a steady rise in defaults as well as a boost in new claims for personal bankruptcy."

This downward cycle is just beginning. In 2006, a mere $300 billion in ARMs reset pushing overleveraged homeowners to the brink of insolvency. Imagine what will happen in 2007 when $1 trillion of these explosive loans comes due. And, of course, as more people are unable to hang on and their homes go into foreclosure; inventory will continue to skyrocket."

Monday, February 5, 2007 in The Market Oracle

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 2, 2025 - Diana Ionescu

White and purple sign for Slow Street in San Francisco, California with people crossing crosswalk.

San Francisco Suspends Traffic Calming Amidst Record Deaths

Citing “a challenging fiscal landscape,” the city will cease the program on the heels of 42 traffic deaths, including 24 pedestrians.

July 1, 2025 - KQED

Google street view image of strip mall in suburban Duncanville, Texas.

Adaptive Reuse Will Create Housing in a Suburban Texas Strip Mall

A developer is reimagining a strip mall property as a mixed-use complex with housing and retail.

2 hours ago - Parking Reform Network

Blue tarps covering tents set up by unhoused people along chain link fence on concrete sidewalk.

Study: Anti-Homelessness Laws Don’t Work

Research shows that punitive measures that criminalized unhoused people don’t help reduce homelessness.

4 hours ago - Next City

Aerial tram moving along cable in hilly area in Medellin, Colombia.

In U.S., Urban Gondolas Face Uphill Battle

Cities in Latin America and Europe have embraced aerial transitways — AKA gondolas — as sustainable, convenient urban transport, especially in tricky geographies. American cities have yet to catch up.

6 hours ago - InTransition Magazine