“30 percent of home owners “under water”. Home values will drop another 3-5 percent and stay at that level the next few years”
“stay at the level”?
Sure, because nothing causes price stability like your neighbor getting foreclosed.
Your neighbor doesn’t even have to foreclose. He just has to sell his house at a price that is competitive with the foreclosures in the area. Then when it is your turn to sell you’re not going to be able to unload your house for 20% more than every other house that has sold in your neighborhood for the last 4 years.
The entire inventory of foreclosures has to be worked through before prices will stabilize. Until then ALL sales will be priced as if competing against a foreclosure next door.