Oh, yes, Dorothy, we're in for the ride of our lives...

From a housing blog's April 11th, 2007 entry:

In a conversation with a City Councilman from a city in Riverside County, I was told the following:

New home permits (and associated fees) are down by 64% this year.
Sales tax revenues are down 6% - 8% this year.
As a result, the City is going to slash its budget by 10% which will likely result in layoffs.
It’s different in Riverside County, you know. What is going on there?

IMO, the drop in new home permits is just a sign of the deepening crisis in the housing market. Where is the spring rally? What about all the foot traffic we have been hearing about? If the builders were anticipating renewed strength in the housing market, wouldn’t they be starting on new homes?

IMO, the 6%-8% decline in sales tax revenue is even more alarming. If unemployment is low and everyone is working, why would consumer spending fall off so dramatically? Were the builders and sub-contractors activities accounting for that much of they local economy? What role does the decline in mortgage equity withdrawal have in this decline? Is everyone tapped out? Many of the housing bears have stated the economy is too dependent on real estate and continued Ponzi Scheme borrowing and it is due for a crash. Are they right? A 10% drop in economic activity sounds like a pretty hard landing to me.

Lord Almighty.