I’m not going to reply directly to the majority of the latest responses, because most of them are exactly the sort of thing I dismissed earlier: claims of “it’s different this time” (sometimes even using that phrase) with nothing more than generalities in support. I give these claims about the same credence I give to “we’ve hit bottom” and “subprime problems won’t spread” statements from real estate bulls.

Bugs,

The history suggests that the downslope isn’t exactly a mirror of the upslope. The price drops are generally slower than the rise — this is the commonly-cited “stickiness” of prices in a downturn. However, the price drops are stronger in the first few years than they are later in the bust. I will try in a subsequent post to make some more specific comparisons between the last bust and what has happened so far in this one.

SD Realtor,

I want to emphasize that the Case-Shiller data are not the same as the MLS data, and it is risky to mix statistics between the two. The Case-Shiller index shows a 5.3% decline from peak as of January 2007. I believe the 8% drop cited by Bugs is reflective of the MLS data. I assume your comments about drops in specific areas are also based on MLS data, or perhaps just on anecdotal instances. The Case-Shiller data is collected for all of San Diego county. I don’t believe they provide any breakouts for zip codes or other limited areas.

No matter how strong or weak the downturn, there will undoubtedly be some areas that perform better than others. A given area may have experienced gentrification, infrastructure improvements, etc. that help shore up prices, while another area may have the opposite pulling prices down. I assume this was true during previous busts as well, so I don’t see it as something distinct this time. As I imagine you realize, individual buyers and sellers should be looking at the specifics for the property that interests them, not just broad economic numbers. Even in a strong downturn, a specific property may be worth more if it has been thoughtfully renovated. And a property might be worth a lot less even during a strong upturn, if the previous residents used it as a meth lab, or if a canyon wall collapsed taking the back yard with it. So I don’t make any pretense of trying to predict what will happen in highly localized areas. Making county-wide predictions is sketchy enough!