NLSG,
I agree with your premise. I think it will be on a smaller scale and spread out over a few years. I have always beleived the next leg down will be 2 to 3 years of 5 to 10% declines. I dont see 50% declines around me at least on a large scale.

Here’s a rough example of how I always beleived it would play out. 900K peak house drops about 20% to 740K between 2005 and 2009. Drops 40K in 2010 700k, then another 35K in 2011 to 665K and another 30K in 2012 to 635K in 2012 for a total drop of approx 30% off peak number.

Most in my area bought pre bubble and many bubble buyers are well heeled. Most will hold on if they can because they value their lifestyle and the life they have for their families. They will hold on as long as they think they can. Of course there will be casualties and the best opportunities will go very quickly. The lowe rprices go, the more the sideline buyers want them and the more they can afford them.