But it could take a few years for that to happen in metro Phoenix.
The prognosis for the housing market's recovery came Wednesday at the Urban Land Institute Arizona's Real Estate Trends conference. The real-estate think tank's annual daylong gathering is one of the state's biggest and most influential real-estate events. There, top economists, analysts, developers, brokers and investors present candid market predictions.
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"The bottom of the housing market may occur in 2008 or 2009, but a full recovery will probably take three to five years," said Elliott Pollack, an Arizona economist and real-estate investor. "This slowdown ends when housing prices stabilize, and they will. Unfortunately, the worst is still ahead of us."
Because of foreclosures, metro Phoenix home prices could fall 30 to 35 percent from 2006's peak and values won't likely return to that high before 2015, said Gadi Kaufmann of the national real-estate advisory firm Robert Charles Lesser & Co.
Home sales could drop to 35,000 and home-building permits could fall to 20,000 this year, Kaufmann told the audience of more than 1,000. That's more than a 30 percent drop from 2007.
Long-term, after 2010, the projections for population growth and changing demographics call for 40,000 to 42,000 new homes to go up in metro Phoenix.
"Many of us thought last year would be the worst for the housing market, but 2007 was just the beginning, due largely to the credit crunch," said John Chadwick, president of builder Pulte's Southwest operations. "But the long-term fundamentals are still good for Phoenix. This is still an affordable region for the West."
Foreclosures are the big wild card for the housing market. A record 10,000 metro Phoenix houses were foreclosed on in 2007.
How many more houses go into foreclosure this year, how those add to the market's oversupply of homes for sale and whether people who lose homes stay in the Valley all play a big part in when the market hits bottom.
"It's going to be ugly, ugly, ugly this year," Pollack said. "But in five years, this will all be a bad memory."