Kelly Bennett’s 2007 housing market wrapup quotes local housing analyst Peter Dennehy as saying that "a lot of people believe that this will be the year that the elusive bottom is reached." Mr. Dennehy is surely correct — many people believe the bottom of the housing market is close at hand. But are they right to do so?
It’s true that prices have taken a protracted hit. According to the Case-Shiller Home Price Index, San Diego prices have in aggregate been falling for about two years now and, as of October, had fallen 13.3 percent from their late-2005 peak.
But this decline, steep as it may seem, must be viewed in the context of the enormous speculative bubble that preceeded it.