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Well the data is in.  Northern Wisconsin showed a median price decline of 6.9% from the second quarter of 2007 to the second quarter of 2008.  There was a 31.2% decline in existing home sales.  Generally speaking brokers believe that inventories will rise or stay the same, and that the number of buyers has declined. 

So what does this mean? 

1) Expect prices to decline as inventory rises and demand falls.

This is good for home buyers that have good credit, and it is bad for sellers that have high mortgage balances on their homes.  The fact that prices have not fallen significantly is probably and indication that many sellers can't budge on prices.

2) The availability of credit has affected the number of qualified buyers.

I have talked with numerous banking and mortgage people and the bottom line is that credit is tight.  This of course has made headlines the past few weeks with Wall Street in a financial crisis.  Things have indeed clogged up, and banks are very cautious.  It has swung to far the other way.  If the Fed and Treasury can figure out how to undue things it would really help.  If not this could be catastrophic.  Let's hope for the best.

What do we do?  Prepare for a significant recession.

1)  Stay calm. Panic feeds on panic.  We've come through this before.

2)  Don't borrow against your home to pay off credit cards.  Figure out a way of negotiating with creditors without using your house as an ATM. 

3)  Start getting your financial house in order.  Don't use credit cards.  Pay off credit cards as fast as you can. Cut expenses any way you can.

4)  Pray for the next President, because he's got a real mess on his hands.  There are no easy solutions.  We are going to have to bite the bullet and do the least painful thing which in and of itself will be painful.

5) Count your blessings.  We are better off than 90% of the people in the world.