How far will prices drop?

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Good morning, Armanti Edwards, and happy Labor Day. Here’s a quick roundup of what we’ve seen this morning; we’ll file once or twice more today, but otherwise it’s a Holiday Schedule at L.A. Land global headquarters.

How far will prices drop? 7%? ... 16%? ... 30%? .... 50%? Manhattan Beach Confidential rounds up various gloomy predictions (gloomy if you are a seller).

The ‘Hey, everybody else was doing it,’ defense: The L.A. Times’ Michael Hiltzik reviews the Countrywide saga. It now appears Countrywide’s sophisticated public relations response to the mortgage crisis was drafted by a 7-year-old boy: we made a bunch of really foolish loans because, well, everybody else was doing it.

If you are trying to figure out the ramifications of a possible tax break on ‘phantom income’ from a forgiven mortgage debt (this is the income tax that homeowners owe after selling their house in a ‘short sale,’ for example), read Kathy Kristof’s explainer here.

Lastly, since it is a holiday weekend, a time for leisurely and expansive thinking, we encourage you to comment on yesterday’s post about Cashing Out and Leaving California: If you owned a home here outright, would you stay and enjoy L.A.? Or cash out and leave the 405 in your rear-view mirror?

Comments, thoughts, insights and bloviations are always welcome.