Short: nominal values in bubble areas will take 20-30 years to recover, which corresponds to roughly 2% expected growth in value. That sounds fair. I'm sure that optimists would expect higher return, and pessimists don't think the value has bottomed out yet. The problem in the article is with one particular sentence-paragraph:
And these are nominal prices: Inflation-adjusted recovery will take even longer.
This was a bubble. That means that prices were way too high to be justified. It also means that "inflation-adjusted" prices will NEVER recover. If they do, it will mean another bubble.
I'm not sure why that sentence would be allowed, but my guess is that they don't want people who bought at the peak to do the smart thing and bail. And that would cause problems. The fact is that the nature of a bubble means that peak prices won't (shouldn't) ever recover. Anyone who bought at that peak is pretty much screwed. Those who paid cash or who put large down payments are probably out a huge chunk of money. Those who financed the bulk if not all have a debt level that doesn't match their asset. They should walk. It is the smart move.
I have heard a lot of carping about "moral hazard" and that those that walk are dead beats, but I don't buy it. Those that walk will take a hit: credit scores, and any $ they put into the house (closing costs/down payment/rennovation). The banks were the ones who had real moral hazard, and they've been bailed out...by us. It may have been the necessary thing to do but it didn't feel good, and it should have some benefits to the house owners who were either duped or greedy. It doesn't though, so they should walk. All of them.
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