I used this data and the first chart on this page, to calculate the price drop over the next 6 years.
Assuming per capita income will continue rising at 3% annually, and that the ratio of median house price/per capita income will reverse at the same rate as it rose (unlikely), in 2012, the median price will be $364,132, a 32% drop from the 2005 median of $539,823.
None of this is adjusted for inflation.
If this time is different, because the exotic loans were different, the correction could happen quicker or deeper. Perhaps 40% is possible after all.
My only point in propagating this is to help people. Anyone who owns a house, is looking to buy, ought to consider this seriously and make sure they can handle this large of a drop, both in their home’s equity, and in the economic repercussions of their jobs. Just be prepared, that’s all I want for people.
