My “educated” guess is that the hardest hit areas (the ones with the most “distress”) will stay flat for years to come. The areas with little to no distress will sell at prices according to what buyers will pay in accordance with its level of desirability. If a buyer refuses to pay the prices of a non-distressed area, they will go to a more distressed area to purchase property in which they can make a deal in their price range or continue to rent in their (non-distressed) area of choice until they cave in and pay what the market will bear there.
I agree with pemeliza in that longtime-owner-sellers with substantial equity who do not have to sell can wait this market out indefinitely, unless they are already very old. In that case, their heir(s) will either take title to the property, rent it out or sell it for whatever they can get today.
“Distressed areas” include those with substantial “shadow inventory” even though there is currently little active inventory there.
