BobS
Historically, V-shaped housing prices just have not happened. Not in the late 1970s runup, or the late 1980s runup, or the most recent one.
The reason is largely rooted in mass psychology–what Keynes called “animal spirits”. A buying frenzy needs to be fed by recent evidence that there is big money to be made by making the huge committment that buying real estate represents. That is why the upturn feeds upon itself–everyone can point to big profits all around them that they are missing out on unless they jump in. But consider the atmosphere at the bottom: everyone who bought in the last 3 years (or 4, or 5?) had their head handed to them. Real estate investing will be seen as only for the foolish. Renters will be the smartest guys in the room.
It is easy to say now that there will be lots of bottom-fishers to propel a quick rebound, but psychological factors explain why it seldom happens.
