Not necessarily. I think that by the beginning of 2008 we will see a redux of teh real estate market her in the Houston area we had in the late 1980's. Foreclosures were up 1000% (yes that is not a typo) and the banks were happy to dump house for whatever they could get.
Yes, but if the houses are offered at a very low price, you will still get a bidding war of investors and that will run the final price up to where it should have been anyway.
There was an oil bust going on then - empty office buildings all over town, in addition to homes. The situation is not the same this time and Houston housing prices are still well below the average of other major cities.