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To imply that housing has reached close to a bottom is grossly premature. The late 90s through the early 00s brought about the most manic housing bull market in generations. Indeed, in this span house prices were outstripping inflation by 5, 15, and even 30% per year in some housing markets. Long term, however, economists find that houses on average keep pace with inflation or just barely beat it. So, after years of double digit returns on housing, it will take some time to 'regress to the mean.' Furthermore, after a bubble, markets typically over correct.

The formulas you cite suggest that there is approximately a 10% chance that housing prices will be lower two years from now than they are today. I wonder if those 'experts' would actually take such odds in a bet. If they gave me 5 to 1 on my money, I'd take the bet. Shoot, I'd seriously consider taking a 1 to 1 bet.

A few other points to consider, when looking at the 'numbers' that are put out there:
1. some are rolling averages. this is huge and can cause you to overlook an upturn. for instance, if sales were down .2 % three months in a row, then the average is .2% down. however, if sales were down 1%, then down 1% and then up 2.6 %, the total would be positive .6% divided by 3 = .2% up - you just missed an upturn.
2. when the reporting is on average sale, this is very misleading. of course the markets are weighted in the lower end now as investors scarf up the deals that will most easily cash flow. just because average sale dropped, that doesn't mean that the sale price in all price ranges came down. for instance, say last year you sold 20 homes at 10@100K, 5@200k, 5@500K. your average would be $225K. now lets say that this year you sell 20 but they're at 16@100k, 2@200k, 2@500k. average would be $150K - that doesn't mean all sellers have dropped, just that more sold in the lowe...(Read more of this comment)r end.....(Show less of this comment)