It will come in about 3 yrs, at least in my opinion. The belief that real estate is forever unaffordable is absolutely ridiculous!!! Asset prices are only controlled by demand and supply. The demand for current inventory levels is just not there.
The recent inflation in Real Estate asset values has been due to artificial demand caused by speculative buying and the introduction of exotic loans. In the next couple of years all this demand is going to be converted into supply in terms of foreclosures and speculators trying to sell.
Speculators who are unable to sell will try to rent but that will result in rents going down and that will in turn cause an even bigger deficit for the speculators, a classic deflationary cycle that will lead them to foreclosure as well.
The massive rise in inventory alone will send Real Estate prices to spiral downward to HELL! My school of thought is that 30% decline is “in the bag” and I would hardly be shocked if there was a 50-60% decline in real terms (inflation adjusted) in the next 5 years.
Remember that there are also other catalysts like the loss of construction and other Real Estate related jobs which has been the majority of job growth here in Southern California.
So far the downturn has been much much bigger and faster than all the “experts” have predicted. Each month these experts are going back and “revising” their estimates which is a total joke! Why can’t they just come out and speak the truth? Well, prediction of doom is always unpopular of course and they don’t want to be the ones that publish it!
