Absolutely Correct!

Implications: Housing is hurting.  This will impact the economy as the "housing ATM machine" disappears. We are not even in the middle of this downturn. 

Analysis:  With 3.7 million homes on the resale market in the U.S., and 1.4 million new homes sitting unoccupied and not in excrow, the debt burden is hurting a lot more people and companies than even the subprime borrowing situation. Add it up; more than 5 million homes are "on the market".  We are seeing houses stay vacant, and 30 month inventory levels become the norm. We are reaching a point of stagnation, where buyers refuse to commit, and sellers not wanting to drop prices any further. My guess is that the sellers will have to "blink" first, as the only way for the market to develop will be at a lower price level.  The current situation is that the transaction volume is down, but prices are much less so.   The next phase is that the volume will continue to stay down, but prices will drop(2007-2008).  Finally, when prices have dropped far enough, buyers will return, but with more stringent lending practices, the market will not see the fever of 2003-04 for some time.