I'm not a fan of piling on the bad news and adding to the hysteria over the economy. There's already plenty of that to go around already.

But I have had several conversations recently with developers, architects and others about what the next ugly step might be in the housing slowdown.

What they're telling me is that they're waiting to see if buyers start walking away from their pre-sold condo purchases and what happens next. For obvious reasons, no one's anxious to speculate about this publicly but they're already thinking of the scenarios that could happen.

Like: Let's say someone bought a condo for $500,000 and put $100,000 down, but now it's only worth $400,000. That person goes to the bank to get the mortgage, once the building is getting to the point where the sale has to be completed. And the bank says, we're not lending you $400,000 for a condo that's only worth $400,000. You have to put up another $50,000 so that you have some equity in the unit.

And that person just can't do it, doesn't have another $50,000. Or maybe the bank just won't lend them money, period.

The developer will get to keep the $100,000 and try to sell it at a new, reduced price of $400,000. But he could be facing a situation where there are no takers, at least not for several months, during which time he has to carry that cost.

Of course, that scenario gets even more likely if buyers only put down smaller amounts, $20,000 or $30,000.

Well, won't the developers just start to sue the buyers, you ask?

Because that's technically what they could do. According to many people I've talked to, once the buyer signs the purchase agreement and puts the deposit down, s/he is legally obligated to carry out the sale.

Well, if the market only drops a little, developers say they're unlikely to make the effort to sue. One guy who works south of the Fraser told me recently that if a condo out there was sold for $200,000 and then the market drops by 15 per cent, it could well be that buyers will start walking away if they only put down $20,000 anyway, figuring they've lost that money already.

And the developers probably won't sue in those circumstances. As he described it, "You pay your lawyer a lot of money to go to court to sue the buyer, the judge asks how much you could sell the condo for today and you say $170,000, so he says, well, if you sell it for that, you've really only lost $30,000 from the original price the seller agreed to. And since he already gave you $20,000, you've really only lost $10,000. So, bang goes the gavel, that buyer only owes you $10,000." But in the meantime, you've spent almost that much on lawyers' fees.

So most developers won't bother when it's that kind of differential.

But if there's a bigger drop and bigger losses and more to be recovered if you sue? That's when people I talked to started to say, Well, we'll have to cross that bridge when we come to it.

Everyone's hoping it won't happen, of course. There's a lot of talk about there about how the Vancouver market is essentially sound. That's because there haven't been any huge job losses here yet and there are still people moving into the region. At some point, they're going to have to buy a place to live.

One prediction I've heard is that the housing market will stabilize sometime September, after weaker developers spend the winter dumping their condos at any price just to get some cash flow.

But who knows? Every day, there's some wild swing in the economic news. Sales are up. No, they're down. There'll be a recession for sure. No, it won't be that bad. Restaurants are packed. Restaurants are closing. And so on.

We're all just waiting to see what's left when the wind stops blowing.

With a report by CTV British Columbia's Frances Bula