CRE defaults, Alt-A and Option ARM defaults, China’s economy about to go into reverse, etc.
Then we need to start considering when and how many muni bond issuers are going to default - and if they do, and the bonds were wrapped by the monolines that are still on their deathbeds... what will happen then? California’s debt situation alone will roil the markets for weeks.
There’s a bunch of shoes waiting to drop this coming year.
And housing is STILL overpriced. Housing has to come back in line with what is supported by people’s incomes, not what is made “possible” with absurd and fancy loan products.
When housing is sustainably affordable based on mean household incomes (ie, that the median home price is back in the area of 3.0X median household income), then home prices can be supported by actual income.
In California, they have easily another 15%+ to fall to get into the range of sustainable home prices without fancy mortgage products.
Debt deflations hurt.
There is an added dimension to this deflation which is that a lot of "median income" that has supported the housing bubble was generated by income earned off of the housing bubble. So, as deflation occurs, incomes that derived from asset inflation will disappear.
This kind of restructuring is going to be very painful.