flynn23 wrote:
For sure, the predatory practices of lenders over the last couple of years has definitely pushed the market into uncomfortable territory, and there will be another wave of fallout as investors get whacked on their returns, but this will probably clear up by years end, maybe Q108, and then you'll see prices start rising again. Except for areas that are still dealing with fundamental economic depression (like MI).

Flynn's observations seem to track those of economists.

Fannie Mae says "at some point in 2008 he expects unsold inventories to have fallen enough to relieve downward pressure on house prices."

NAR says "it expects existing-home sales to rise to nearly 6.4 million in 2008, up from the 2007 estimate of more than 6.1 million. Nearly 6.5 million existing homes were sold in 2006, the association said."

Bernanke says "the pace of home sales seems likely to remain sluggish for a time, partly as a result of some tightening in lending standards and the recent increase in mortgage interest rates. Sales should ultimately be supported by growth in income and employment as well as by mortgage rates that--despite the recent increase--remain fairly low relative to historical norms. However, even if demand stabilizes as we expect, the pace of construction will probably fall somewhat further as builders work down stocks of unsold new homes. Thus, declines in residential construction will likely continue to weigh on economic growth over coming quarters, although the magnitude of the drag on growth should diminish over time."

However, there is some risk that there are more people in houses they can't afford than the Fed estimates. Bernanke also says "One risk to the outlook is that the ongoing housing correction might prove larger than anticipated."

Housing, is this the year to buy?