the early 90s model cannot be applied to the current downtrend because this one has it’s own unique set of circumstances. The subprime and exotic loan meltdown is a HUGE factor in this decline and it was hardly present in the last bust. The price appreciation from 2003 onwards is purely due to exotic lending and a large majority of these homeowners will lose their homes when their exotic loan resets. Also we have a much higher percentage of cash-out refinancings in this cycle compared to the early 90s. This is another aggravating factor.
I subscribe to “the higher it goes the harder it falls” point of view. I think this downturn will also be the same timespan of 5-6 years but we will probably see a much sharper contraction earlier in the cycle due to the over leveraged post 2003 buyers foreclosing en masse.
