You need to take into account the effect of inflation over time as well.

At 50% off, prices may be at a nominal level approaching that of 2001, but inflation adjusted, they’re much closer to the previous busts lows of 1996-1997. Wage inflation in San Diego County between 2000 and 2008 was over 30% (using US Census estimations – yes, San Diego did much better in wage inflation than much of the country), and that has to be taken into account. An inflation comparable “bottom” equivalent to the previous “bottom” would then be about 140% of 1996 prices (and thats probably on the conservative side).

Admittedly, this was a historic bubble, it’s POSSIBLE that the overshoot will be enough to get us back to the previous cycles nominal bottom prices (which looks like about 60-65% off peak), but I think it unlikely, as flu’s tier 1 and tier 2 buyers would be out in droves picking up properties that would cashflow instantly (and heavily) as rentals.