Because of the ongoing decline in the economy and resulting job losses, you will see continued foreclosure activity for at least the next two years.

I expect home prices in the mid to upper prices ranges plummet e.g. $2.5 million dollar house two years ago, will go for $800,000 today, and $700,000 house will now sell for $350,000. The $350,000 houses will sell for $175,000 to $200,000. And $250,000 houses will sell for $100,000 to $125,000. Excellent bargains for those with solid jobs, and who pay their bills on time.

The low end houses, from $5, 000 to $65,000 will actually stabilize from the increasing competition growing between investors, first time buyers and those people displaced by downsizing out of the short sales and foreclosures. These low end prices will become the norm for the next two years, and once again, you can expect to see excellent bargains, many of which will require just minimum fix up.

You can expect that home values overall will continue to decline with the job market. You see, unemployed people don't buy new cars, new furniture, clothes, or spend a lot of money repairing and decorating homes that they don't own. This will further exacerbate the economic downturn and reduce production as consumers scale back spending money they don't have. Since their credit is now severely tainted, they won't be getting much in the way of new credit to spend with either.

As the average income drops with each new round of layoffs and downsizing continues to haunt the landscape for at least two more years, the average wage will drop to below $13.00 per hour which qualifies a buyer for about $65,000 sale price. That means a two income family will qualify for about $130,000 home. Since the average sale price has fallen from $241,000 to $181,000, we have about 24 months more to go before the majority of two income home buyers will qualify.

At that point, which I expect should come right around the middle of 2011, you should expect to see homes sales stabilize and the markets recover. When the average house price falls below $130,000, purchases will begin to increase, which will then create a demand for jobs as industries hire to fill the demand for consumer goods.