There is a lot being forgotten when it comes to fundamentals involved in real estate. What it comes down to is that there is one very basic element to predicting how much prices will correct over time. The leading indicator being: What can the people of a given area afford based on average income and the current interest rate on a standardized loan (30 year amort. has been the gold standard)? Since most all other non-standard and risky forms of mortgages are quickly being worked out of the system, it will very soon come back to this basic fundamental level of affordability.
For example, a life-time SD resident such as myself, with a professional degree, earning upwards of 30% over median “family income” (without including my significant other’s income) cannot afford an average home in an average neighborhood via standardized loan with 10-20% down. Until prices come to a point where I can afford a home given these conditions and making no more of a payment than ~30-35% of my income then prices are not fundamentally sound and I can expect further declines. Otherwise I can expect overall incomes to increase by >30%, interest rates to skyrocket to >1980’s highs or the area to turn purely into a luxury haven where only the richest 10% of people can afford a home. Based on these predictions and aside from mortgage rate changes that I cannot predict (likely to go up greatly though!), I expect single family homes in a somewhat desirable neighborhood to drop 30-60%. It is that simple. The only thing one cannot predict are economical pressures or MANIPULATIONS that would alter the timeline for reversion to equilibrium.
