For quite some time, I have been of the opinion that the market would recover in the middle of '09.  I have revised my thinking to somewhere around late 2010 at best.  The latest Case-Shiller Index shows housing deflating at a 32% rate, down from a decline of 8% just six months ago.  The chart is amazing to look at from early '06 to date.

 The housing inventory is so high now, about 4.6 million as compared to the normal 2.6 million average.  I am taking those numbers from the latest commentary by MacroMavens.

RealtyTrac is showing foreclosures up 65% from April of '07 to April of '08.  I think it will take more thhan a year or two for the market to absorb all the excess inventory, prices will have to continue to drop a good amount for the residential real estate market to recover.

I feel bad for the folks that purchased or over refinanced in the last couple of years, they will most likely be underwater for a few years.  Still, if they have a mortgage that they can afford, and did not fall for the creative crap that has been out there, they should be fine.  It is silly to think of one's home as an investment vehicle.  People should always look at is as a roof over their head and nothing else, returns, if any, are a bonus.