I would tend to agree with iseedots on this. Addressing psychology, I think there is an overall underlying sentiment on the part of most folks that is pro-homeownership. At this particular point in time that underlying sentiment may be overlaid with a psychology of caution and restraint due to the market conditions, but as prices fall the underlying desire to buy will emerge, at different points in time for different people.

I was around and a homeowner during the last real estate (and overall economic) downturn last decade and the prevailing concern then, in my opinion, was regarding jobs and the economy. I recall no negative sentiment toward real estate in the sense of “real estate is a terrible investment.” In fact, there was a general consensus among smart money folks that SD real estate was a sound investment and that we would see real estate prices rise substantially out of the recession. That being said, I don’t think it is too helpful to look back at those days inasmuch as we have a completely different scenario confronting us in the current market.