Reply #3: They have a long way to go still.

[SlipperySlope]

Assume the starting price of a home was $100,000.

Now take San Diego as an example.

First, prices rose by 150%:
$100,000 -> $250,000

Then, prices fell by 25%:
$250,000 -> $187,500

They still have 47% to fall to get back to where they started.

If you don't think that is realistic, you can factor in a 3% annual rate from 2000 to 2008, and homes STILL have 32% to fall before they are where they belong.

If you bought in San Diego in 2005, you are screwed. Just walk away.