If we were discussing this graph in 2005 we wouldn’t have the same perspective that we have right now. That graph isn’t current, and as our recent history proves, prices didn’t level off after all.
The prices are already in decline, particularly here in SD and Riverside counties. They’re already dropping at a relatively fast pace, faster than they did during the 1990s. This trend hasn’t reached maturity yet, which is the only reason some people consider it inconclusive, but it’s just a matter of time; and right now time is not on the bulls’ side.
You can tell this is going to be a big correction by the time its all over because of how far it’s come in the last 24 months and how quickly it’s picking up steam now. We’re not even close to peaking out the bad news meter.
Don’t forget, in addition to everything else that’s going on, we have a huge wave of Boomers who will be retiring starting in 2010 and who will have far too few assets (by then) to retire in place. Even the demographics are running against the idea that prices will stabilize at a higher plateau.