I find it funny that a contributor who is estimating a 19-30% nominal decline in prices is considered bullish.
About a year ago I penciled out some projections based on reverting to the point where monthly rents and mortgage expenses were roughly equal, assuming 5-10% down and ignoring opportunity costs of the down payment. This is where the market was at the last bottom in 1996-1997.
This required some assumptions: interest rates, rent changes, etc. When I assumed rents increasing at inflation of about 3% and interest rates at 6.5 – 7% I came up with about a 19- 26% nominal decline for Central San Diego, depending on the parameters. This probably coincides with a 25-40% real decline depending on the inflation assumption and duration of the cycle.
Sure, there are a lot of variables that affect this: interest rates, inflation, local job distribution, etc.
Of course it didn’t factor in either : a) runaway inflation, b) spiraling deflation, or c) the fall of Western Civilization.
R.O. – I don’t think you are that far off. Just my opinion.
