It’s also interesting to note the differences in how the markets fared in the 81 & 91 events. Oregon was slammed hard by the 81 recession – we had a timber-dependent economy then and as homebuilding stalled around the country we experienced the ‘double whammy’. -10.9% appreciation in Q3 of 81! Those were dismal days here. It wasn’t until Q4 of 82 that CA had a slightly negative quarter. While the early 90’s CA depreciation was barely noticed here. A lot of what drove that period of depreciation in CA was the slashing of defense spending that happened after the collapse of the Soviet Union (remember all that talk about “The Peace Dividend”? Seems quaint now). Oregon had (and has) little or no defense-related industry, but CA had plenty of it. However, the other thing that was happening in the early 90’s here in Oregon was that CA companies like Intel were expanding operations up here because of the lower costs of labor, electricity and land. I was one of the many transfers from the Bay area during that time. Those of us who were transferred up here were like kids in the candy store when we looked at houses that to us at the time just seemed dirt cheap.

However, this time I don’t think we’ll be decoupled nearly as much as during the early 90’s. We’re not seeing the kind of growth in good-paying jobs like we did in the early 90’s. In fact, Intel has been downsizing. And they’ve found even cheaper labor in places like India. They’re the biggest employer in the Portland Metro area and they pour a lot of money into this economy. But this time the amount of money they’re pouring in is either stable or decreasing.

Also, the credit tightening has only just begun and it will be evenly spread around the country.
NovaStar (a large subprime lender) just announced large losses today and they also said that they would not likely have any profits until 2011 (no significant profit for four years!?) http://www.thestreet.com/_yahoo/newsanalysis/banking/10339886_2.html

Also take a look at this commentary in the Wall St. Journal where they worry over the possible recessionary effects of the credit crunch:
http://www.opinionjournal.com/weekend/hottopic/?id=110009681