True Story: July 1989 at the very top of the market I sold a Glendale home for $590,000. From that day on it started to decline in value. In about 1992 it foreclosed at 475,000 and again a couple of years later around 400,000. The market was depressed from 1990-1997. Things stablized around 1997-98 but prices stayed at around the same as mid 90s, and # of home sales did not increase much but buyers not paralyzed by fear of the market were buying. In 2001 things went from a ho hum "normal pace" to more rapid as the economic news got better and hence there was less fear and lots of buyers came out to buy. In 2003, I sold that same home for $1.025. 000. The value went to about 1.250 during the "bubble years" and now in 2009 it is worth about 1M again. While no one can predict the market, real estate has always been, over time, a good investment. Most fortunes, dot.coms excluded, are made in real estate. Buy to hold and live in it. A home is for your lifestyle and dreams. It is an asset you can actually use and enjoy. A side benefit is that over time it makes you some money, probably a bigger sum than you can make in your job or stocks or 401K over the years. But that should not be the primary objective of home ownership. We lost touch with the real "value" of homeownership over the past few years and had unrealistic expectations. Unrealistic expections in lending, unrealistic expectations in what our return on investment should be and how quickly it will happen, and on and on. Oh, and another thing...renters are paying a mortgage, its just not their mortgage, it is someone elses. And your landlord, who knows the value of real estate over time, thanks you. Landlords hold property over time so as to build their retirement portfolio. Why not build your own over time? Those waiting for the market prices to drop further need to realize that the home prices do not drop in a vacuum. If and when they drop again, it will happen in a lot of bad and fearful ecomonic news. It will sound like doomsday. It will make that waiting buyer even more fearful. The regular guy does not act during a fearful time. Hence, he will not buy until economic news gets better, and that better economic news will be positive because it will be reporting a rise in home sales, and the bottom will be passed and the waiting buyers will then all rush out to buy and create an artificial rise in home prices...again.