The Kool-Aid Brigade wants you to know that prices have stabilized. They may have…but not in this universe. Check out the handful of truly scary graphs (courtesy of James Bednar, at the excellent NJ Real Estate Report) at this permalink (you may need to copy & paste in your address bar):

http://njrereport.com/index.php/2008/02/06/north-jersey-january-residential-sales/

This is chilling stuff. We appear to be well on the way toward record-high inventories, married to a record-low sales pace. Is this an environment in which prices will stabilize?

NAR, TMac and the Kool-Aid Brigade have sounded the “all clear”.  “Prices have stabilized, mortgage rates are low…it’s a great time to buy” is the mantra.  Too bad that all the mortgage lenders are bleeding out and would rather hold on to their cash than lend it: 

From The Wall Street Journal, Page A3, Tuesday, February 5, 2008:

Credit Tightens, Demand Falls
By KELLY EVANS and DAVID ENRICH

Banks are tightening lending standards for businesses and consumers — even beyond real-estate loans — and companies’ demand for credit has weakened, a new Federal Reserve survey of senior bank-loan officers shows.

The January survey offers the hardest evidence yet that the credit crunch is spreading. Although banks also reported some tightening of lending requirements on credit cards and other consumer loans, commercial and industrial loans have been the most severely affected.

One-third of the U.S. banks and about two-thirds of the foreign banks responding told the Fed they had tightened lending standards on commercial and industrial loans during the three months ended Jan. 31. About half the banks said they have widened the spread between their cost of funds and what they are charging borrowers.

“Bankers are becoming more cautious,” said Keith Leggett, economist at the American Bankers Association in Washington, “but also borrowers are getting more cautious.”
…
“The downturn in housing markets is having a ripple effect into the commercial real-estate market,” said the ABA’s Mr. Leggett. “It’s going to create some challenges for community banks,” he added, especially in parts of the country where real-estate prices have plunged the fastest.

With bad loans piling up on banks’ balance sheets, some lenders are finding themselves strained for capital. As a result, banks — especially community lenders with big portfolios of commercial real-estate loans — are balking at making new loans, even to clients with solid credit histories, said Jerry Blanchard, a partner in the financial-institutions practice at law firm Powell Goldstein LLP in Atlanta.
…
On the consumer side, about 55% of the banks said they had tightened lending standards for mortgages and about 60% said they had done so on home-equity lines.