I tend to agree with you, but I would add the time element: I'd say [absolutely arbitrarily] that a drop of >30% with a recovery time of longer than 5 years to the present levels would be a collapse, and probably a collapse would take more than that. Do we call DOW drop from March 2000 a "collapse"? From 12000 to 7500 [37% drop] and now back at 11300 - all numbers rounded. Either a smaller drop or a shorter recovery could be classed as a hiccup.
All this talk of collapse is funny, A 20 percent drop in prices would be considered a collapse by many, but houses have been increasing by 20 percent per year in my area for the past five years, it means very little, except if you buy the year before the collapse. I have been involved in real estate for 10 years and have Financed thousands of people in all types of loans, the bottom line is the vast majority of those people can afford their loans even if the rates increase. What usually causes foreclosure which I see a ton of also, is not rate hikes it is mismanagement of debt, lousy life management and speculative buying. Areas of high danger are any area that is a high percentage of investment property. If you live in this kind of area, then be wary. If you have lots of rental properties that are not penciling out and you are counting on flipping them to make a profit then beware. If you are living in the house you own you can ride out any bumps in the market just ask anyone in orange county California who sat out the last out the crash and made a killing within 5-10 years on their properties. Over leveraged people trying to flip properties are losing their butts right and left as are some banks that actually own the properties. Or did everyone think that the individual that was on title owned the property? Nah the lender owns the property when the brown stuff hits the fan, and they are the one that takes the fall. For example I was in Palm Springs for a home improvement show a month ago, when a local Realtor informed me that foreclosures in the area were up by five or ten times in the last year. I did not verify it, it seems obvious by property values and rising rates that it didn't need verification. The point of all of this is that now is not the time to INVEST in real estate flipping unless you know what you are doing and are not over-leveraged. For the average home owner nothing has changed, make smart choices, pay your bills. In time your property will be worth alot more than it is today, no matter what temporary things the market does.