I think prices in this area will come down to 10xGRM eventually, perhaps by late 2010 or 2011.
I’d wait a while to buy and watch the prices and GRM’s come back down to reality.
I would agree if I believed that we were going back to the days before massive government intervention in the housing and MBS markets and the packaging/selling of mortgages as securities in the MBS market. Those two factors alone are responsible for the housing bubble more than anything else. If banks actually had to carry mortgages again, 20% down would be de rigeur. Is that going to happen? Your guess is as good as mine.