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When sales started slowing back in early 2006, builders, for the most part, stopped building large numbers of speculative homes

That is not even close to true. That there was a genuine market bust as opposed to a temporary slow-down was not clear until after New Year 2008. It was only a couple of months ago that the NAR capitulated and admitted that there was a real problem. There are plenty of speculative developments being completed even now as we speak in DC. Large developments have lead times of years and enormous quantities of sunk costs. Failure to complete and you lose not 30% of your final expected sales price, but ALL of your money. Land with abandoned structures becomes almost worthless because of the cost of clearing the land and cleaning it up to make it suitable for some other purpose.

I'm speaking from my own experience, where I live. Builders had developments ready to go in this area, and held off during late 2006 and early 2007, because inventories were rising. Many waited until mid-2007 to start construction. Those houses are up, and on the market, and seem to be priced only slightly less than what they would have sold for in mid 2005, before the slowdown, so it looks as though those builders are planning for those prices to hold.

This housing 'crisis' wasn't nationwide. It seemed limited to certain regions; CA, Las Vegas, Detroit, the DC area, and especially FL. There were varying reasons for it. Some of it was just 'irrational exuberance', if you will, on the part of builders, realtors, and people who wanted to make a quick buck buying and selling real estate. Some of it was the subprime mortgage problem, though that affected much fewer people than most realize, and large urban areas with poorer residents, like Detroit and LA, tended to be affected by this. Some builders were hoping it would be short lived, and they wanted to keep their crews working, and have houses ready, in case it turned around. Another problem, and this was true mainly in FL, was the insurance situation. It became cost prohibitive to purchase homes, because the insurances costs had risen so much in the last couple of years.

There was no ONE cause to the housing problem, and even though folks like to complain about a 'bubble', after this slowdown, prices will pick up, and the cycle will begin, again. Those houses that were built will get sold, as they always have, because most people buy homes for their families to live in and enjoy, not just as investments. This housing 'crisis' has created an enormous opportunity for folks who wanted a larger home, or wanted their first home, but couldn't afford one a couple of years ago. With those homes coming down in price sometimes 20 or 30%, or more, in price, they are now in the range of families who were priced out of the market before.