Y2K all over again

A report by BusinessWeek states that home prices could dive another 25 percent or more within the next two to three years, "returning values to their 2000 levels in inflation-adjusted terms." The report quotes David A. Rosenberg, a Merrill Lynch economist: "We now see potential for another 25% to 30% downside over the next two years."

And then there is Chris Flanagan, a head researcher in JPMorgan Chase's asset-backed securities group, who predicts that prices will fall about 25 percent, hitting bottom in 2010. Ian Shepherdson of consulting firm High Frequency Economics, says a 40 percent price decline wouldn't shock him, according to the article.

In the long-term, home prices rise about 0.4 percent a year, when adjusted for inflation, which means that the price gains during the rapid real estate run-up are grossly out of whack with historical trends -- the report suggests that the clock may have a lot of room to turn back on home prices. U.S. House Finance Committee Chairman Barney Frank, D-Mass., states in the article: "Homeownership was oversold."

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