Predictions for the Real Estate Market in 2008

In my opinion the housing market will continue to slowly drop until the foreclosure crisis is over, this will happen, when the Banks finally DO something to get out of this vicious cycle once and for all.
Just like in 1996. Right now, they are just being difficult in processing short sales and doing what would help move the inventory faster and cut losses to the minimum for everybody; of course this requires for them to recognize and take a huge loss, so they are just waiting to see if some kind of miracle will materialize in the near future, which probably won't.
In the meantime, short sales are not being cleared with enough speed, prices keep dropping because of the lack of activity in the market and this all starts to turn into a vicious cycle that ends with properties being foreclosed at a scary rate.
Sooner or later the Banking industry will need to take all their foreclosed properties, start packaging them and sell them at $0.50 on the dollar, take the hit (which is likely to somehow be transferred to our ever increasing deficit, inflation will increase, the dollar will loose value, this, by the way will make our products and our nation more competitive in the global market) then, with the market free of this excessive inventory creating a negative preasure on the prices. A healthy price level (probably 5 to 10% lower than what it is now, mid 2007), and with no more foreclosed properties casting a "ridiculous price" shadow on the rest of the market, the sky will be clear, the prices will stop dropping, the real estate market...slowly but surely will go back to being the great solid investment that it has always been.
It will probably take 3 or 4 years to begin appreciating again, but it is certain it will. Just as inflation is real, and population growth is real, and obsolete buildings are real, and human need for housing is real.

Remember, this is a 10 year cycle, with 5 year memories.

Right now, as it was expected, you are seeing all the "chicken littles" coming out of their shells crying "wolf" and trying to convince us that the world is going to end. The scarier their prediction the more important they feel.

Remember that human kind re-invents itself all the time, our nature and our instincts are to improve the life of our children one notch above what we lived, this very human disposition, multiplied times billions of parents creates one true "joint effort" to improve the world, and that has happened since the beginning of time and will continue to happen for ever.

The falling of prices and slowdowns in the economy happen every few years, and pretty soon all these "crows" will go back to their caves, and we will see the market flourish again.
Cycles have always been a natural behavior of real estate as well as any market and any activity where humans are involved, and cycles will continue to happen.

Don't worry world!.... life is great, and the sun WILL come out tomorrow!