I’m expecting 1998 prices across the board – all areas of town, all property types

this will erase the current bubble

any overshoot takes us lower – potentially much lower

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20% of peak value means the 3/1 in Clairemont is worth $100K or less (they were $500K’ish in mid-2005)

hard to imagine that happening unless most people, investors included, decide that real estate is a dead asset category – ie, the attitude of “I wouldn’t buy real estate if you paid me”

I guess another thing that could cause a drop to 20% of peak values is if banks stop lending on real estate or make the terms to borrow so onerous that the only people buying real estate are the ones who can pay cash – how much real estate would you buy if the interest rate was 18% and the bank wanted 30% down?

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I’m expecting the 3/1 in Clairemont to go for $225-275K (today’s dollars) at the market bottom

That is 45-55% off peak values and puts the house at a price where investors will be interested