Until lenders are wiling to make loans that do not make financial sense, it would seem that the short sales and foreclosure will continue in places like San Diego and other parts of California. People can not afford to buy expensive houses, if they have to have 20% down, 6 mos worth of payments and the bank and steady salary or income commensurate with the amount of the loan for which they are applying. So in one respect CAR is absolutely right. Prices will not go up until there is a stimulus - perhaps cheap available money.
But, I think there is another factor. People were willing to be house poor and risk their financial health in an up market because they had to. In a down market does anyone want to be house poor to lose money on a depreciating assets.
This bubble will unwind until people say, that house is worth the sacrifice or when supply dries up. Until then short sales and foreclosure will feed the demand we currently have and put every increasing pressure on prices.
Sales/Price Report Sept 07