"It's never a happy situation when home prices depreciate, so I wouldn't wish that on us," he said. "But in actuality, if we stop home price appreciation for a while, we'd be able to recover and reignite our housing situation sooner than would otherwise be the case."

However, both Matthews and Schlossberg concluded with some optimism.

Locally, Matthews said, "I anticipate that it will be a tight labor market. We'll have to hire people away from existing jobs. But I think we'll have a year that'll be pretty close — maybe not a duplicate, but pretty close — in terms of job growth and housing starts this year."

On the national level, Schlossberg said the coming year likely will bring higher interest rates. And through 2007 and into 2008, Schlossberg said the stock markets in particular will be challenged to transition smoothly in the face of those higher rates and disruptions in individual markets.

"Going forward, we will expect to see some hiccups, some disruptions in the market," he said. "The real test will be to contain that volatility. But we are in a transition toward more normal financial market conditions."

And, he added, "We're not looking for a recession. We think that there are a couple of pillars of strength in the economy, which will allow the growth recovery that we're seeing now to continue to develop."

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