That's the conclusion of a new report from Harvard's Joint Center for Housing Studies.

The falloff in housing starts, new home sales and existing home sales already rivals the worst downturns since World War II, according to the Center's State of the Nation's Housing 2008. Home prices are down, and defaults up, to levels we've never seen since recordkeeping began in the 1960s and '70s.

The study provides a well-documented look at how we got in this mess.

During the first half of the decade, easy credit and surging demand for real estate pushed home prices to record highs. Prices ran so far ahead of incomes from 2003 to 2005 that by 2006, the number of households paying more than half their income on housing rose to 15.8% of all households.

To expand the pool of buyers and keep the boom going, lenders pushed adjustable-rate, subprime mortgages with artificially low initial payments on borrowers who couldn't afford them.

When those loans reset, monthly payments soared beyond what millions of families could afford, triggering the unprecedented number of defaults and foreclosures we're seeing today.

Lenders facing billions of dollars in losses suddenly became stricter about who they'd lend money to, making it harder for everyone to refinance or buy a home.

Although home prices have fallen, they're still too high in states such as California, where some economists say prices need to drop by 40% to reach affordable levels.

"The slump in housing markets has not yet run its full course," concludes Nicolas Retsinas, the director of the Joint Center for Housing Studies.

"Mortgage rates have barely responded to the aggressive easing of the Federal Reserve, the supply of for-sale vacant units continues to grow and much tighter underwriting is locking many would-be home buyers out of the market. With home prices falling in most metropolitan areas, homeowners are tightening their belts, remodeling less and staying on the sidelines."