The Case-Shiller Index is declining in most cities (see http://blogs.wsj.com/economics/2015/12/26/home-prices-few-metro-areas-spared/).
So far as I know, this is unprecedented in the post-WWII era. In the past, even when a few housing markets have seen price declines, most have not. This means thar default risk and cost has been managable to investors in Mortgage Backed Securities.
The current environment is much tougher to deal with, and could mean that default costs arising from sub-prime mortgages will be higher than I expected earlier. It also cannot help but have a negative impact on house price expectations nearly everywhere. As I have said before, it is hard to see a turnaround coming anytime soon.
One bright side: when the commerical real estate market collapsed in the early 1990s, some analysts thought it would take a decade to recover--instead in took around 3-4 years to do so. Strong population growth in Arizona and Neveda should put some cushion underneath those markets (although the slowdown in Florida's population growth will further weaken a market that is already pretty devastated).
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