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The bottom is in. The issue is prices won't be going anywhere in dollars, although they will appreciate in nominal dollars.
The market is being held up through the election cycle. The next recession is baked in, and it will not be pretty. Should make for great headlines after Christmas and into January. The rich, really rich, super rich, and mega rich are all cashing in their chips, once they've liquidated their assets then us peons will be left to find musical chairs is over and we lost. There is some serious turmoil right now in places like the Caymans and Bermuda where liquidation is happening quickly and behind closed doors.
Folks who have fixed, low rate mortgages will fare OK. The idea of a good return on investment is dead for the rest of the decade, it is all about preservation of wealth. Home prices in good neighborhoods in mega-metro areas will be OK. Good means well educated, insulated from poverty and with strong public schools.
Prices can't rise in dollars because it's a catch 22, as most pointed out. Improvement in employment will push up interest rates, which will hold down price appreciation. Rates remaining low will indicate low to stagnant growth, meaning sales will stay sluggish nationally.
Leaving your cash in your mattress is not a good idea, but accumulating wealth in your house (provided you live in a good neighborhood in a mega metro area in a pocket of prosperity, eg SF Bay) is not a bad one.
Different regions are going to hit the bottom at different times, just as different regions hit the peak at different time. For example, Sacramento, CA hit the housing peak around mid 2006 and then had a rapid decline in prices; the change happened rather suddenly, like someone just flipped a switch. Just 70 miles away, San Francisco's prices was still raising until the crash in 2008. But even within SF, different neighborhoods crashed at different times. Bayview started crashing around 2007 while Noe Valley was still soaring like gang buster.
In San Francisco, the bottom was late 2010/ early 2011. While Sacramento is still trying to find a bottom (maybe it's here already but we won't know until after the fact).
The key is: last to fall, first to rise; and first to fall, last to rise. If your region is among the first to pop the bubble, likely your region will be among the last to recover; and vice versa.
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