HLS, your guess is as good as mine, but I think that as general prices go down over the next 2 years, buyers who bought at lower prices will start to face difficulties, triggering more price decline pressures. As esmith said, this thing feeds on itself, so it’s very hard to say that 2003 prices or 2001 or even 1998 form the bright line at which prices will stop declining.
For example, short of government intervention in the form of inflation or bail-outs, where will the rational lenders come from who give 90% of a home’s purchase price in an environment where prices are declining by 10% annually with no upturn in sight? You’d have to be desperate or stupid to be the ultimate investor making such a loan to anyone in a state with no-recourse purchase money loans.
Eventually, prices will go up. Why? Becuase they always do. But I think it’s too early to accurately predict the bottom for this downturn.
