DaCounselor, downturns and bubble busts are always worse than anybody expects. That’s why I’m betting on a 50% price drop. We’ve already lost 10-15% on North County homes. According to Jim Klinge at bubbleinfo.com, North County homes are back at 2004 pricing. In the last cycle, the highest drops came in years 3-5, so the highest drops are yet to come. This time, the intensity will be greater due to exotic loans and our economy’s reliance on construction and real estate.

50% might be too optimistic. Maybe a 55% nominal drop will do it.