[quote=CA renter]
It is not the over-supply of housing that will cause the future house price decline, IMHO, but the reduced demand — particularly of those who are willing to pay current prices. If investors/speculators begin to think that the housing market isn’t really all they thought it would be, you could see a pullback in demand between 20-50%+ in some markets. And if traditional buyers see the slowdown, they will also not feel as compelled to pay the same prices that are seen today because of the incredibly hot market (thanks, in large part, to the Federal Reserve’s interest rate policies and price-setting mechanisms which affect prices/yields of all asset classes over time…and are being coordinated with central banks around the world).

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The big investors are already out of most markets, and they have been for a few months. More in some markets. So far, resale numbers nationwide haven’t dropped significantly. June existing home sales is likely to be slightly lower than May and inventories only slightly higher. As I said here late last year, this summer is likely to show some moderation in the price gains over the last 18-24 months, and possibly even slight drops in some markets. Higher interest rates (which are likely to drop back 20-50% of the recent increases) are likely to put similar and additional downward pressure on prices. That said, demand will remain sufficient to support prices in most markets.