I think a lot of you guys underestimate the impact fear can have on a market. Right now I think most people are blindly confident in real estate as an investment. If people are fearful I don't see why things couldn't overcorrect.
Just think, when the stock market starts to drop, it usually absolutely tanks as people sell in fear. I know houses are less liquid, but the same principal applies. Once fear selling gains momentum it usually causes the market to overcorrect, then rebound.
Just look at most minor stock market crashes. When fear is added into the market it usually eclipses the original issue, then once the panic selling stops the real market value of things becomes apparent again.
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