While “The Meltdown Continues” is an appropriate way to describe the subprime situation, we haven’t even experienced the meltdown in housing prices which is on the horizon due to the well of easy money drying up. Things are just getting started. If sellers think it has been tough to find a buyer lately, they haven’t seen anything yet. Countrywide, one of, if not the largest of the subprime players, just said no more zero down loans. Their new requirement of a paltry sounding 5% down is not doable for a large percentage of buyers, hence the zero down “affordability products” in the first place. A stake has just been driven through the heart of the market. My mortgage broker was telling me last week, that many deals are not being funded come closing. Buyers and sellers mistakenly believed that being pre-approved would guarantee closing. Nope. I am now seeing houses coming back on the market which had appeared, at one time, to be sold. Add these into the ever growing resale, foreclosure, and new home inventories, and you’ve got a supply nightmare on the horizon. And, an oversupply means lower prices. Lower prices mean fewer refis, more “have to sell” houses coming on the market, even more foreclosures, and this thing feeds on itself all the way to the bottom, wherever that is. It’s curtains. The unfortunate thing, is that the greedy lenders waited until the bitter end to shut off the tap. Had they done so 2-3 years ago, the market would be much healthier today. Now, years of pain are on the horizon.