The housing crunch continues. The Los Angeles Times Land Blog has a stunning report on just how bad real estate prices have fallen in California during the past year. According to the California Association of Realtors press release, the median sales price of an existing home fell by a whopping 26.2% from a year earlier. The unsold inventory reached 14.3 months compared with 8.2 months for the same period in February 2007. Nationally, prices fell over the past year at a rate of $338 per week; in California, prices apparently fell at a rate of $2,788 per week. Such declines do not yet show signs of decelerating or even bottoming.

Apparently, according to the L.A. Daily News, " In the first two months of this year, losing a home to foreclosure was almost as common for families as buying a home in the San Fernando Valley area. During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in Valley communities from Glendale to Calabasas, according to the San Fernando Valley Economic Research Center at California State University, Northridge. By comparison, during the first two months of 2007 - also in a slumping market - there were just 235 foreclosures and 2,481 sales."

Other observations on this last Thursday in March 2008 include:

• John Meriwether's firm, JWM Partners LLC, launched in 1999 after the collapse of the predecessor firm Long-Term Capital Management, is having a tough go of things in this credit crisis. According to The Wall Street Journal, the firm's Relative Value Opportunity Fund apparently has plunged by some 28% this year. According to a March 18^th letter to investors, Mr. Meriwether told clients "We have sharply reduced the risk and balance sheet of the portfolio… While the opportunities are among the best we recall, we continue to balance our need to control risk while attempting to capture the opportunities we feel are available." According to that letter, the funds of JWM Partners losing positions have included mortgage securities backed by Fannie Mae and Freddie Mac, trades tied to municipal bonds and triple-A-rated commercial-mortgage-backed securities.

  Rather interestingly, the fund's leverage increased to 14.1 at the end of February. While some of that high leverage position no doubt is due to the plunge in market value, the fund was operating with a leverage of slightly less than ten to one. One would think that good risk management principles would have dictated that the leverage be reduced in periods of high volatility (and before March 2008). It will be interesting to see whether John Meriwether will retain his clients and gets to play yet another "short volatility" strategy in the hedge fund world. One has to wonder just how many times investors will endure a "once in a hundred year" storm, especially when at least three seem to have come along in less than two decades.

• According to the same WSJ article, "The credit crunch and market volatility have roughed up other multibillion-dollar hedge funds, which on average have lost about 3.35% this year, according to Hedge Fund Research's daily global performance index. Platinum Grove Asset Management, the $6 billion hedge-fund firm run by LTCM alumnus Myron Scholes, has lost 13% this month on credit trades, putting it 10% down for the year, according to a person familiar with the fund. Also, Farallon Capital Management LLC in San Francisco, which manages about $36 billion, has lost 5.6% this year through last week in its flagship Farallon Capital Partners fund. And Steven Cohen's SAC Multistrategy Fund is down about 3% this year through last week, according to investors." His [and Aldon Hynes' former] Stamford Connecticut-based firm now oversees approximately $16 billion.

• The current leading bear analyst, Oppenheimer & Co. analyst Meredith Whitney, has turned even more bearish on Citigroup's first quarter earnings. According to this Bloomberg story, she now is predicting that "the bank will lose $1.15 a share in the first quarter. That compares with her earlier loss estimate of 28 cents." She famously was the person last fall who first predicted that Citigroup would need to cut its common stock dividend. Now she is predicting that Citigroup will have to write down as much as $13.1 billion more in assets, including those in the leveraged loan and collateralized debt obligation categories. Rather tellingly, "This will not be our last reduction in 2008,'' Whitney wrote in the note. "We anticipate further downside to both estimates and stock prices'' because banks will be under pressure to mark down assets to reflect falling market indexes.

• ConAgra Foods Inc. agreed to sell its profitable commodity trading and merchandising operations to hedge fund Ospraie Management for $2.13 billion and posted a 60% jump in fiscal third-quarter net income, largely due to that division. ConAgra said it will receive about $1.6 billion in cash, $525 million in debt securities and a portion of the unit's earnings for the remainder of the calendar year. The deal, expected to close in about two months, will see Greg Heckman, president of ConAgra's commercial business, oversee the trading business, to be called Gavilon. With grain and commodity prices up so much in the past year, is the sign of a commodity market top?

• In the first two months of the year, the financial services sector has cut more than 20,000 jobs, according to a survey by Challenger, Gray and Christmas. Any bets on what the total to be slashed in 2008 might be? What would be the reader's over/under number? Lars Toomre is personally thinking that the number will be close to 100,000 when all of the hidden job cuts are factored in.

• Harvard University has picked Jane Mendillo, chief investment officer for Wellesley College, to run the nation's largest college endowment. Ms. Mendillo will take over July 1 as president and chief executive officer of Harvard Management Co., the company the runs the $35 billion endowment. She succeeds Mohamed El-Erian, who left last year to return to Pacific Investment Management Co. in Newport Beach, Calif. During her five years at Wellesley, the school's endowment had an average annualized return of 13.5%, and grew to $1.7 billion from $1 billion. Prior to Wellesley, Ms. Mendillo worked for 15 years at Harvard Management, where she held a number of positions, including vice president of external management. According to the WSJ, "Jane Mendillo has an excellent record as one of the most able and accomplished investment managers in the endowment world, as well as an extensive knowledge of the Harvard endowment and a deep commitment to higher education," said James F. Rothenberg, treasurer of Harvard University and chairman of the HMC board of directors. She also worked under Jack Meyer, the former head of Harvard Management that decamped with much of the fixed-income staff to start Convexity Capital Management.