So begins a new year in the Sacramento real estate market, remarkably making its case as the fourth straight year of a downturn.

A slump that began with nervous whispers in the summer of 2005 has escalated into a prolonged economic crisis that promises to define 2009.

Home Front spent time in the electronic library this week, looking at how experts misjudged the extent of this decline as the housing market began to wobble and shift in 2005 and 2006, even 2007.

We aren't trying to pick on analysts who were then swimming in uncharted waters after a long, euphoric boom. The Bee's real estate coverage, too, had its overly sunny moments.

That said, we're now 3 1/2 years into this painful reversal of fortune. From the files, here are memories of what the pros said as the market started – slowly at first, then faster and faster – to fall back to earth.

• October 2005. As housing values had already started to roll back down the hill, a National Association of Realtors report pronounced Sacramento's real estate market in "excellent shape with a potential for significant equity gains."

What happened: In a year, median sales prices fell 8 percent in Sacramento County.

• July 2006: "The evidence of a cool-down is everywhere, but I don't think there's evidence of a collapse. I think barring any major macroeconomic shock, like a real spike in interest rates or unemployment, things are going to remain pretty flat."

– Sean Snaith, then director of the Business Forecasting Center at Stockton's University of the Pacific

What happened: The next year in Sacramento County, home sales fell 23 percent and prices fell 10 percent.

• September 2006: "It's not pleasant, but in proportion of the economy it's one-third as big as the S&L losses in the 1990s."

– Chris Cagan, then director of Research at First American Real Estate Solutions, predicting $110 billion in U.S. foreclosure losses across five years

What happened: The International Monetary Fund pegged U.S. losses at $565 billion earlier this year. Then, taxpayers put up $700 billion in Wall Street bailout funds. The S&L crisis cost taxpayers $124 billion, according to the U.S. General Accounting Office.

• October 2006: "I think by next spring the residential market will reach a plateau. … If my scenario holds up, you may be under water 10 percent for a while. I don't know if you'd call it a soft landing, maybe slightly hard, or hard light or something, but you'll still be fine."

– Richard Kovacevich, then chairman and CEO of Wells Fargo & Co., in a Bee interview

What happened: Sacramento County median sales prices fell another $24,500 by June. In July, year-over-year depreciation went into double-digit percentages and has accelerated ever since.

• November 2006: "It's not like we're seeing a huge erosion in home prices, and really do not expect to see that going forward."

– Robert Kleinhenz, deputy chief economist, California Association of Realtors, giving a 2007 real estate forecast to Sacramento Realtors

What happened: In 2007, Sacramento County sales prices fell 20 percent. In 2008, they've fallen again by a third.

• January 2007: "We don't expect any significant decline unless there's some major economic shock, and we don't anticipate that."

– Alan Nevin, chief economist, California Building Industry Association, unveiling his 2007 forecast

What happened: In 2007, California's new-home sales fell 31 percent. This year, they fell almost twice that much.

• January 2007: "I agree the foreclosures will be a fact of life moving forward and will play some role. But I don't think that, in itself, it can move the (real estate) market as significantly as in the 1990s. The reason is the economy in California is on much firmer ground than we were in the '90s."

– Keitaro Matsuda, senior economist, Union Bank of California

What happened: Within 21 months of those words, California recorded 274,374 foreclosures, moving the real estate market to one dominated by bank repos. Statewide, median sales prices have plunged 41 percent the past year, according to the California Association of Realtors. Unemployment is the highest since 1994.

• June 2007: "I think right now, we're probably bouncing around the bottom."

– Sid Dunmore, then chief executive officer of Granite Bay-based Dunmore Homes

What happened: Five months later, Dunmore Homes filed for bankruptcy protection.

• March 2008: "I think California has maybe two more quarters of tough sledding and things are going to get better. … It's just a 36-year gut feeling kind of thing."

– John Robbins, a San Diego mortgage banker, and 2007 chairman of the Mortgage Bankers Association

What happened: That was three quarters ago.

So, who wants to predict 2009? Will those Alt-A loans be the next wave of foreclosures? Will the Sacramento County median price touch $165,000? Who's next to go bankrupt? When does it turn?

Such questions come as we continue the fourth year of a once-unthinkable downturn. Here's to new challenges and opportunities, to the 2009 real estate story soon to unfold.

Call The Bee's Jim Wasserman, (916) 321-1102. Read his blog on real estate, Home Front, at www.sacbee.com/blogs.