The housing correction in California has been astonishing. As you ca see above, prices are down almost 50% from the peak in 2007.
The California home price correction is getting close to the bottom. I still think its too early to be buying here because interest rates keep rising. Catching a falling knife is never a smart thing to do, and prices look to be continuing to fall faster than Michael Phelps in the 200 meter freestyle.
I would wait until the Fannie/Freddie situation plays out and you see housing prices stabilizing. If we backstop the $5trillion in mortgage debt, the bond market vigilantes might take interest rates higher. California home prices should continue to fall as a result because mortgage rates will rise.
Patience is a virtue guys and gals. Knife catching can be painful!