That’s according to Michael White who notes that if you use a 20 year time horizon, with the 10 city and 20 city composite, and assume that the prices will return to the trend line, then our residential property bubble will bottom after the values fall another 40% from current levels.
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He notes that the US (namely Fannie Mae, Freddie Mac, and Ginnie Mae) is funding about 90% of all new mortgages and that at some point, if the government stops their support, then home prices should crash. Prices for real estate are ultimately determined by our income, and if the trend represents a match of income and price, then the picture of the trend line is the picture of our future.

That said, others will note that applying technical analysis to the Case Shiller index only tells part of the story. If anything, readers noted that there was a limited sample size used to extrapolate future prices. The trend line is only over four years and therefore not useful in projecting a decade into the future. Consumers, investors and others who do not want to see a loss in their homes would rather sit on it for 10 years rather than see a 40% slide in the residential market.
Useful factors would have been based on rising unemployment, rising interest rates, tighter credit, expiration of government stimulus, deflationary pressures on wages and materials.