Let's look at Las Vegas, which the writer uses a "breathtaking" example. The 2,900 homes for sale in 2004 was an incredibly low number for the size of the city. The 17,000 currently on the market is an admittedly high number, caused by the bailing out of speculators. The average of these two numbers (10,000) represents a proper balance. As soon as the speculators wash out, we should be right back where we belong.
70% of homes in LV are selling in under 90 days, even today. What does that tell you? It says that despite the increase in inventory, the sky is not falling yet. And how could it? 6,000 a month move here. These people need places to live.
I believe prices will fall here and across the country, and this is a good thing. Will it lead to economic calamity? No. In fact, unless one is in foreclosure, it really won't even matter. It will greatly help people like my sister, a school teacher, who currently can't even afford a modest condominium.
Here's the article from which I got my numbers. It makes a fairly persuasive case that things are not as bad as it seems. As we all know, numbers can be twisted to say anything.
http://www.reviewjournal.com/lvrj_home/2006/Jun-04-Sun-2006/business/7730279.html