It is a bit cliche to pull out the old saying, “Common sense is not common,” but I’ll do it anyway. During the boom, lots of people’s common sense told them “real estate always goes up,” “San Diego is a highly desirable place to live,” etc. Common sense may suggest a point to consider — and in fact I acknowledged your own point in my original post — but it isn’t necessarily reliable.
I also want to take exception to your comment about “an arbitrary percent decline.” I did not apply an arbitrary percentage. I applied the historical pattern from the last bust. This might or might not be the most accurate approach, but it is not arbitrary.
