One thing I learned during the dotcom bubble and bust was that in every bubble there are “X-factors” that are not predictable but that have significant impact. During the dotcom bubble the accounting scandals and 9/11 were the X-factors that no-one (or at least few) could have predicted. We all knew the NASDAQ was way over-priced and we knew that there were too many well-funded startups chasing the same spaces. However, we didn’t know that Enron, Worldcom, Adelphia, etc. were going to implode, and we certainly didn’t know about 9/11 (we can debate what other folks knew and didn’t know in another post).

Folks are debating the real estate slowdown, but what the debates don’t take into account is the “outside factor(s)” that could push the market over the edge–like the accounting scandals did.

My intuition tells me that there are two X-factors waiting in the wings that will turn the soft-landing into something harder:

1. I think there might be *ramped* mortgage fraud going on. Like people buying five houses on bogus mortgages that say their living in a house.

2. “creative” mortgage options in California coming home to roost. Check out the infographic below from Marketwatch.

Update: Wow.. talk about ironic, the LATimes has a story today (that I didn’t see when I wrote this) about “a house that was facing imminent foreclosure by the bank. The owner had purchased it with a five-year, low-interest loan for more than $100,000 over what the real estate agent was now trying to get.”