Another very real “thing” that could produce huge drops would be a collapse of the sub-prime lending markets, as the pool of qualified buyers would drop substantially.

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Don’t you mean “the pool of un-qualified buyers who bought anyway would drop substantially”???? 🙂

The problem here is that there are a lot of ways for the market to correct back to fundamentally sustainable pricing levels. It could go relatively flat until incomes and inflation rise to meet. It could mush very slowly downward with no easily discernable changes in direction to signal an end. It could drop off a cliff, but that would take a lot of things to all align together. Many of those things will happen, but all simultaneously? Hard to predict.
If you use history, and expect a 7 year decline, that puts us around 2012 for the bottom. How we arrive there, that’s just about impossible to guess.

And of course, we could easily see some areas do a little of each, where one areas mushes(Del Mar?), one area goes flat(Scripps Ranch?), one area plummets(San Elijo Hills or Condos downtown?), and yet one area actually climbs(LaJolla?). Add them all up together and you won’t easily be able to tell what’s happening to “San Diego Real Estate Prices” when lumped as a whole. Best to just watch your target neighborhood to see what IT is actually doing, then try to time that area.