This analysis could be modified to start in 1998 for the available data, with the caveat that there were not enough high end homes to draw any conclusions. It simply isn’t accurate to start a trend line after the trend started. Also, if we think about where prices will end up, we have to remember rising wages and adjust accordingly. I don’t think prices could go back to 1998 or 1999 levels, because rising wages will support higher prices. People will jump in and start buying when rents, supported by wages, are cash flow positive from a purchase.

To me, that is the bottom. That is when the bottom feeders and investors will come back in, when rents are cash flow positive, i.e. house price = 8 * annual rent. At whatever level the annual rent falls. That is a return to fundamentals.

BTW, is that what happened in the last bust? Did it stop falling when house prices were a multiple of 8 or 10 times rents?