(FORTUNE Magazine) – TOM BARRACK IS HARDLY the only investment pro anxious about the U.S. housing market. Federal Reserve chairman Alan Greenspan has expressed concerns, as have many Wall Street prognosticators who scan key stats like housing starts for signs of trouble. Pimco, the big California bond specialist, isn't sitting around waiting for official numbers; it's digging up its own. "We felt that [a housing slowdown] was going to have a major, economywide impact," says mortgage chief Scott Simon, who is predicting that the overall residential market will cool noticeably next year. "Being able to tell when it occurred was really important."

For that task Simon is employing old-fashioned shoe leather. Last spring he assembled a group of analysts called the Housing Investigative Team and dispersed them to grill homebuilders, real estate agents, loan officers, and appraisers in cities across the country. So far, Team Pimco has visited 20 metro areas--including San Diego, Las Vegas, and Chicago--to collect data on everything from exotic mortgages to the number of days homes sit on the market to the percentage of buyers who are investors. Team members reinterview their sources every month to see if anything has changed.

Simon's findings? "We think that San Diego will be the first place that turns down in any meaningful way," he says. One big clue: a mind-boggling 50% of San Diego's borrowers use non-conventional mortgages (a sign that people are buying more house than they can afford), compared with 20% nationally. Another yellow flag: In certain neighborhoods homes priced at more than $650,000 aren't attracting the homebuying hordes. He predicts that Miami (too many investors) and Washington, D.C. (too many condos), are also in line for a reality check.

For competitive reasons Simon wouldn't dole out much more information. But he had second thoughts about his own backyard during a fact-finding mission to Dallas this summer. He visited a 3,000-square-foot home with a beautiful kitchen, three bedrooms, exquisite landscaping, and a pool. Price: $300,000. Price in Orange County, where Simon resides: $2.4 million, give or take a hundred grand. "I couldn't believe how cheap it was," he says. "It gives you a much better appreciation for where the problems are."