Earlier this month, Fed chair Ben Bernanke testified before Congress about the state of the US economy. He mentioned that it is likely to have problems, especially the housing market, but that he expects things to start turning around by the end of 2008 or early 2009.

This, however, does not square with general trends in house prices. Down cycles in housing generally last 5-7 years, and some think that house prices could decline as much as 30% in the relatively near future.