Looking at prices in the past, after a bubble, prices usually drop below the trend line before recovering. We still have a little way to go before that happens. I think it is natural for prices to continue to drop, and the government should stop meddling and trying to control the market.
Spot on - and thanks for posting that chart.
That plot showing housing prices in the US doubling between 2000 and 2006 is completely bogus. Housing prices with no adjustment increased at a rate from 3% to 4% per year from 1955 on.
How about from 1945 to 1970?
The trend lines converge in 2012. The actual prices, given the predicted drop before recovering, should then converge with those trend lines in 2012 also--which means I will buy in 2011. SF Bay Area prices are still obscenely high. They may not bottom out until much later.