Housing prices will most certainly stabilize in the future and they will go up again and they will go back down again. History has shown that real estate runs in cycles. I doubt seriously, however, we are ever going to witness the frenzy that we saw in 2003-2006 that brought us to this place in our history.
It'd be wonderful if we all had a crystal ball to know where we'll be in 5 years in this real estate market. Yes, location is critical, but price is also critical so don't get yourself upside down as others have. I don't foresee any more major drops in values but I'd still be careful not to overpay for a property.
My recommendation is that in our current market, I would not pay more than the most recent sales in a community. Although a recent sale may be low due to a Short Sale situation, it still remains a comparable that appraisers are going to look at and they will continue to bring down values, unfortunately.
I hope this helps!
Cathy Chapman, Broker
Signature Home Sales, LLC