Lostcat I have noticed some deterioration of the thread so I thought I would post a comment hoping to bring it back to your thoughts.
I think that Shiloh’s post about Japan was VERY useful. Personally I have always thought that things would bottom out in 2010-2011 with at least a nice reduction of downside risk in the 09 timeframe. However I am getting more paranoid by the potential for intervention of some sorts that IMO will flatten out the slope of the decline. This adds a serious wild card that to me could indeed produce a long slow decline… one of many many years, 5 extra years? 10 extra years? I doubt it but I am starting to rethink things at least a little bit. For sure I do not see a V shaped sequence of events. I REALLY want the left side of the V to happen quicker but my fear is that it will not do that. Especially in the areas that I want to live in.
With that said I don’t think you need to be as concerned finding the bottom or which side of the recovery you end up on. What you really want to do is limit or reduce the downside of the purchase; thus minimize the depreciation potential.
Using factors such as sales volume will help to identify some degree of stability. When we get to the point where sales volumes at least match the yoy numbers for several months in a row then that will be helpful. In tandem with that, hopefully a consistent level of inventory will also need to be watched. Another ingredient will indeed be the number of distressed or potentially distressed properties that are in the queue.
Bugs said it best… looking for a year or a time to indicate the bottom is not essential. We all hope that 08 or 09 would be near the bottom like you said, but the real proof will be the indicators.
