It looks like the housing market is continuing to hit new lows.

By Patrice Hill

Of four homes for sale last week on Henry Watts Loop at Rippon Landing in Woodbridge, Va., two were foreclosures. As house prices fall, home equity is lost, making it hard for owners to sell or refinance adjustable loans that reset to reflect higher rates, rendering owners unable to pay their mortgages. That dilemma has sent defaults and foreclosures to historic levels.

This year's housing bust is shaping up to be one of historic proportions. Sales and construction have sunk to levels not seen since the 1990 savings and loan crisis, while foreclosures and price drops are the largest since the Great Depression — and expected to get worse next year.

Many parallels can be seen with earlier housing debacles. Each episode had some combination of easy money, loose lending, greed and fraud that turned a housing boom into a speculative bubble. But few housing bubbles have ended so badly as the one today, when the nation is confronting the prospect of mass foreclosures and family dislocations.

John Stumpf, president of Wells Fargo & Co., the second-largest U.S. mortgage lender and a survivor of the housing busts of the 20th century, blames today's crisis on unscrupulous lending practices, which joined in a toxic mix with outright greed and extraordinarily low interest rates to send house prices soaring 90 percent between 2000 and 2006. When the bubble burst, house prices collapsed by 5 percent to 20 percent in cities nationwide.

"We have not seen a nationwide decline in housing like this since the Great Depression," Mr. Stumpf told investors in New York last month as major banks and securities firms reported an accumulated $80 billion of losses on their portfolios of mortgage investments and widely cut back on lending as a result.

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Well, if the doomsday economy actually happens, it certainly will be a new year.

On the upside, if a person has a good job, and can afford a long term mortgage. this should make it a buyers market. It might not be so good if you're looking to sell though.

Well, there is that.

Doomsday cannot happen --the government involvement in the economy will prevent a major dump.