Housing slowdown to be widely felt: "It's going to be very similar to the stock bubble, but even more so"

Now that the bubble has burst, the bloom is off the rose, and consumers are gonna start freakin out, it's time to batten down the hatches, and prepare for the mother of all recessions. We're in terrible, terrible financial trouble as a nation. Our leaders have failed us, our greed and financial ignorance have led us astray.

Sorry, don't blame the messenger. Most of us have been preparing for this very day. It'll be a tough one, and a long one, for all of us, and I wish you all the best, especially in Phoenix, Miami, DC, Denver, San Diego, Naples, Tampa and Boston. A world of hurt, not seen since '29, call it the Housing Plague, is descending upon your fair cities...

Slowdown in residential building and home sales will be felt throughout the economy; weaker jobs and consumer spending expected

You don't need to be in the market to buy or sell a home to be affected by the cooling housing market.

Economists, investors and the Federal Reserve are watching home building and home sales carefully because the sector has reached so far throughout the economy in recent years, lifting all manner of consumer spending and economic activity.

This week has brought several new readings indicating that the super-heated real estate market of 2004 and 2005 is rapidly fading in the rearview mirror.

"It's going to be very similar to the stock bubble, but even more so. Many who didn't own stock lost their job when the market plummeted," said Dean Baker, co-director of the Center for Economic and Policy Research, and one of those who believes housing prices have resulted in an asset bubble ripe for a correction.

"They might not be directly connected to the housing industry, but they could find themselves affected, even if they work at a factory, or at a local mall. A lot of people have been sustaining their consumption by borrowing against the rise in their home's equity. If that stops, it certainly has to slow consumption considerably."

"Housing accounts for between a fourth and a fifth of the GDP (gross domestic product)," said Walter Molony, spokesman for the National Association of Realtors, referring to the broad measure of the nation's economic activity. "So many other industries see sales tied to the purchase of a home. We get calls from Singer sewing machines about our home sales statistics."

"As we try to clear this inventory of unsold homes, there's going to be a lot of layoffs in construction, and less revenue from the creation of housing," said Hall.

Residential contractors added nearly 200,000 jobs last year during the white-hot building boom, or about one job out of every 10 created in the broader economy.

That means that if the National Association of Homes Builders is correct and there are 150,000 fewer new home sales this year compared to the 2006 record, that's 375,000 fewer construction jobs, or the equivalent of about three companies the size of General Motors.