That bottom could easily be plumbed again, and indeed overshot to the downside in view of the massive bubble on the upside topping out at 218 in 2005, which was completely contrary to historical experience. Housing values fluctuated for a long time around the 120 level, but there is no reason why a bottom should be anchored around that number given the huge oversupply today.
What's really preventing the market from clearing is the banking system. It holds the bad paper on all this oversupply, and to clear the banking system needs to clear. Which means bankruptcy.
And as we all know, bankruptcy is failure, and failure is no longer acceptable in America. Which is why your kids will get no Fs in the upcoming academic term, and why housing will be a Zombie indefinitely.
