Foreclosures may spur price drops: On L.A.'s edges, soaring repossessions could set off a downward spiral. - Los Angeles Times
Can't get worse, you say? Think again. So says the LA Times. And consider that this is mostly new housing on the urban fringe, meaning mainly CIDs. So, if people are defaulting on their mortgages, what is happening to the coffers of their HOAs? I realize the associations have liens for unpaid assessments, but it seems that generally speaking there isn't a lot of equity to go around, and you can't get blood from a stone.

Major lenders are repossessing homes in Southern California much faster than they can sell them, a development that could set off a downward spiral of price cuts and more foreclosures. At some point -- maybe this fall, maybe in 2008 -- the lenders' inventories will grow so large that they will have no choice but to start aggressively cutting prices, many agents and analysts predict. That, in turn, will put more pressure on individual sellers, who will have to reduce their own prices if they want to find a buyer. As values fall, more people could lose their homes, which would swell the lenders' inventories anew.