Business Week interviews housing bear - predicts 40% to 50% real home price declines

I'm telling you, I'm gonna find a nice place in the world, rent, wait it out, protect my limited wealth, spend less, and then come back to the US and buy a great place (or two) in a few years for pennies on the dollar with cash.

How will I know when it's safe to buy again? When the cost of owning is less than the cost of renting. Period. That whole idea of "fundamentals" that got tossed out the window during this stupidity.

Here's the interview highlights:

What do you think is happening to the housing market right now?

The smart money is getting out. The inventory of homes for sale is increasing dramatically across the country. That's typically what happens before you see price declines.... The investors who are flipping homes for profit, like non-owner occupied condominiums, those are the people you would expect to sell first. You're already seeing that happening.

How much do you think prices will decline, and how long do you think it will take?

I think that it's a worldwide phenomenon, and in the 25 cities that have had price run-ups, which make up 40% of the market, we'll see corrections of 40% to 50% in real terms over the next six years. It has already started, and you'll see it happening in more cities in the May-June time frame.

What happens to the U.S. economy if the downturn you predict really happens?

I think it will be a disaster. Not only will people in fields like banking be unemployed but consumers themselves will spend less. They're spending a lot now because they think their house is worth a million. If they find out it's only worth $400,000, they'll spend less.