The easy answers to this question are: Take a least squares analysis, if you are using the right measuring tools and have a long enough trendline then you can make a fairly good guess at where the housing market is and where it is likely to be headed. A check figure involves asset allocation of all financial assets: stocks, bonds, real estate, cash and precious metals in equal portions. You compare cashflow in and out of real estate to the flows in and out of the other assets. One wild card is financial leverage: Free cash reserves by definition involve zero leverage. Bonds are usually unleveraged but can be leveraged by up to 95%. Precious metals have storage costs and therefore are usually unleveraged financially but are often leveraged by means of futures contracts. Stocks can have leverage of up to 50% and this relatively common. Real estate is the only financial asset that is usually financially leveraged and at more than 80% of value. Second wild card, price discovery: Real Estate is the only financial asset that is not fungible as in any 10 year treasury that matures in June 2020 is like every other June 20 10 year treasury of the same denomination. Because of leverage price swings in real estate are usually much greater than in other asset markets. Also because of real estate and non-recourse laws in most states margin calls are made by the borrower not the lender, the exact opposite of other asset markets. So when enough homeowners decide that housing is not coming back and stop paying on the house or simply can't afford to pay on the house it goes into foreclosure. It is stopping payments that the owner can afford to pay that has not yet gone viral when will this happen? And what will be the result?