At the peak we were at a point where one would expect about 45% correction in price + inflation to return to “normal”.
It seems we are just getting started, but are already a third of the way there (not counting the rotten conditions in August-September).
I expect to see another 5% or more taken out by the end of the year in HPI, based on seasonal factors and mortgage turmoil. Combined with another 1-2% of inflation from July to end of 2007, that would put us nearly half-way through the magnitude of decline expected (assuming we were 45% overvalued in real terms).
At the end of 2007, we’ll already be half-way down the hill (or more), in my opinion. Definitely faster than I expected.
