We are already seeing 60% declines in Temecula and downtown. I would say 70%-80% is in the bag for those areas before prices stop falling. Its also possible the worst areas will become illiquid and properties will be have to be demolished or seized by HUD. That would be a 100% drop! 🙂
While I think we will have a fairly severe recession driven by the housing bust, I don’t think that in and of itself will force the big declines. There are simply too many empty properties and not enough buyers/investors to meet the demand.
Re:Helicopter Ben,
Liquidity is a notorious coward. I.e., you can’t force it go where it doesn’t want to. And the Fed isn’t giving that money directly to home buyers, its all going to banks that are hoarding it to cover their current losses. Plus this isn’t the 70’s, so don’t expect wage inflation to make up the difference.
