Back in 2003 legendary investor John Templeton said that real estate was in a huge bubble and his advice on when to buy again was: "After home prices go down to one-tenth of the highest price homeowners paid, then buy."
http://www.garynorth.com/public/4690.cfm
I remember mentioning that prediction of as much as a 90% drop from the highest prices to a successful businessman friend of mine. He scoffed, saying that house prices never really fall, they only stagnate for periods of time. He conceded it could be possible they might fall 5 or even 10% but never 90%. Well they've fallen nearly 40% already where I live.
The point about all the baby boomers looking to sell their houses is a good one. Also, we are at historic low mortgage rates right now. When those begin to reflect the actual risk of lending money for 30 years in these money-printing times, it will drive house prices much lower because it will be so expensive to get a mortgage. There was tremendous overbuilding of housing and we are entering, I believe, a time period where there will be vast amounts of poverty and hardship. Who will have the money to buy a house when they are struggling just to feed themselves?
I think Templeton's prediction of a 90% drop from the topmost high prices may turn out to be not far off.