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How can the housing market be expected to rebound so quickly after 5+ yrs of excessive growth?

Many reports in the press read about how the housing market may recover soon. How could a quick housing rebound be possible if the housing market has been excessively growing (ie 10% excess growth vs 5% historical avg) for over 5 years? Would there not need to be a flattening or drop in housing prices for several years so that they return to historical price/income and price/rent ratios?

Public Comments

1. The price will go up simply because the space is limited and population is increasing.I do not forsee a drastical drop in housing prices.Now Banks have started increasing their Card rate to restrict finance to housing sector.But it is a casual phenomenon.Thing will change soon.After all population is not going to decline.
2. The main variables that drive price are supply and demand Job growth - We are in an Economic growth phase and that makes people feel assured they can carry a mortgage Population growth - We have a new generation buying homes and starting families. Boomers buying condos and retirement homes Immigration - We have large immigration growth looking to start families and buy starter homes The expectation is supply will get soaked up by 2008...will it? there is no telling for sure, but we have some strong drivers
3. It's not when realistic people speak on it. You must be reading David Lerah or NAR reports. It will correct and will correct hard until the valuations return to normal. Robert Kyosaki is also full of it but if these people told you that the market was going to tank they wouldn't get paid so that's what they say. This won't be fixed without some serious pain. The real Alt-A resets don't start until the fall and the underwriting has already closed the loop so no refi's without actual proof. The real pain in coming later this year.