Third and most important point is inflation. Simply put, the imbalance of supply and demand. This can come from either too little supply or too much demand or both. Look at the gasoline prices in this country. Generally it is believed that with China's entry into the 20th century the demand for oil and oil products has jumped dramatically thus causing a quick and large increase in the price. There is also the fact that OPEC is controlling the supply which helps create shortages and thus, higher prices. The same price action will occur again in real estate because of excessive demand and not enough supply.
The problem most people face is the fear of being too early or not getting the lowest price possible. Let me tell you why this is "fools gold" thinking. The average American will not find out that real estate has turned for 4 to 6 months after it happens. When real estate is purchased an offer from a buyer to a seller is accepted. The we have the escrow or closing period of any where from 30 days to 90 days, probably averaging about 45 days. Those who track real estate sales do so at the end of every month. If you buy something on March 15th and it closes May 2nd then those who report will get the info in June. You will know about it at the end of June which puts you about 4 months behind the buyer.
IF ENOUGH BUYERS ACT AT ONE TIME TO START A TREND you will miss the beginning and the prices that are "oh so affordable" now will be but a distant memory.
Lets look at the stock market and compare and contrast it to real estate. The stock market is the nations investment arena, or so say those connected to the market. In 2000 it self destructed and the world had come to an end. By 2007 it hit new highs thus completing an investment cycle. The real estate market is different to a degree and that is what makes it better. No one has to invest in the stock market and the reason they do is to make their money grow. That is the main purpose of the stock market as far as investors are concerned.
Real estate is a great investment to make your money grow but it also has a utility that the stock market doesn't possess: a place to live. Everyone needs a place to live and that gives the real estate market the edge, in my opinion, over the stock market. Forget the tax advantages of deducting the interest on the mortgage, or the tax free accumulation of money created by the $250,000 profit exclusion upon sale of an owner occupied house per person (husband and wife get $500,000), real estate is a real shelter, pure and simple. That is why my money is where my mouth is, so to speak.
The best thing that can happen is the rebounding of the real estate market and most of the problems that are hurting Wall Street would be gone. Loan portfolios would once again be worth face value and we could get on with the normal business of both banks and brokerage firms. This would really be a win, win situation.