While things may look somewhat bleak now, I think deadzone is being just too negative. Quite sure desirable areas of San Diego are not going down to 2000 nominal prices…just not happening. It doesn’t matter if unemployment rate is 12% – you just need a certain section of the population to keep doing well, which they are. Even if you breakdown the unemployment numbers now, the jobless rate amongst blue collar workers is 3 times that of white collar workers and the jobless rate amongst people with professional degrees is about 5%, nothing to be alarmed about.
We will see further declines ahead..but the majority of the decline has already happened. If anything, its almost certain we will have significant inflation in a few years and 2010-2011 home prices will look really cheap in 2020 in nominal terms.