I don’t believe that this will happen, but if resale median prices drop 7% in both 2007 and 2008, making a three year drop of around 20%, then the number of foreclosures will be astronomical, and the market could take 10 years to recover.

Isn’t this nearly exactly what happened in the last cycle. Prices peaked, dropped about 20% over about 4 years, then returned to the previous peak levels ~8-10 years later.

Could it happen again ?

I think so.
This is more likely than doomsday (put your money in non-dollar denominated gold bond) scenarios.