It will take stages. First new home builders will liquidate inventory homes. They will back-add forfeited deposit from ex-buyers into reducing the price, potentially you can 20-30% discount from inventory new homes. However, these inventories will be cleared away in 1 to 1.5 years. Then, builders will go back to normal sales. You probably should not expect inventory price any more. Remember, builders always build for profit. If they don’t have any profit, they will delay marketing and put the project on hold or sell very slowly. Thus, inventory sales is once in a cycle (10 year) opportunity.

Now, next winter, e.g., winter of 2008. Used home sellers will finally succumb to pricing pressure and collectively reduce price, you will then expect to see great bargain at that time. Remember, always find bargin in winter, that’s when it’s hardest to sell and the best chance to get bargains.

This housing slump is a once in a life time opportunity for long-term real estate investors. Make great use of it!