This should be entitled a primer on How Markets Work.  All markets tend to overshoot on both the upside and downside.  The real estate market is no different.  The residential real estate market topped out at grossly overpriced levels in 2006.  It is now down 35% from its peak and is considered fairly valued in relation to rents.  But, human emotions go to extremes and this has not happened in the real estate market yet.  If the economy slows significantly latter this year and into next year (possibly recession), expect real estate prices to soften.    In addition, the income tax laws will be changing dramatically next year that could negatively impact real estate prices.  In other words, the mortgage interest rate deduction could be severely curtailed.

Do I believe real estate prices have finally hit a bottom>>>NO.