Banks are skewing the price structure. If this situations go on for long time, then, the whole region’s pricing structure may get pulled down. Bank’s 50% price cut is definitely a biggest enemy to regular sellers, causing regular sellers impossible to compete.

However, in inner suburbs, i.e., the wealth belt, the pricing should stay relatively stable. I would expect some 20% drop, that’s about it. However, in outer suburbs where most lower middle class lives or where hispanics and poorer immigrants live, things are getting worse and worse.

The best hope for sellers are: Foreclosure waves will slow down and disappear. Then, pricing in outer suburbs may get stablized or even recover a bit. But I don’t think it’s likely. I don’t think the foreclosure wave will stop before 2009.

The most possible scenario will be: Next 2 years, i.e., 2008 and 2009, we’ll see some of the worst market in our memory. Bank owned pricing structure may spread to regular market. By that time, the nation will get into recession, causing layoffs and etc, further reducing the appetite for home buyers. I expect the REO peak will be sometime around late 2008 or early 2009, during that time, you will see some INCREDIBLE deals, I won’t be surprised to see a 70% discoun from some bank-owned sales.