Well, I've been watching the housing market closely these past few months, and things look like they're starting to cool off. It's heartening really, and for the first time in a while I'm thinking maybe we'll avoid a disaster in this arena. Most bubbles only seem to end when things get to a completely unsustainable point, and then they end rather violently. But this time, maybe not (though I'm not too hopeful). In the article I linked to, it seems that many people are trying to sell right now for fear of prices going down soon. In short, maybe the comparatively free flow of information this time around will prompt people to get out sooner, meaning we should see a less acute downturn, and maybe just a leveling off followed by a gradual decline. People are reading up everything they can about "housing crash" or "housing boom" or whatever. In fact, about half of the traffic on my blog is directly related to the "Housing Crash?" entry I made, either through links or web searches.
This would be better for everyone, even me, though I don't own a home. A sharp crash and a panic will do enourmous damage to the economy, and the overall effect on everyone will definitely be worse than if we could just get things back into line a little more gently.
I mentioned in my first article on this that prices would need to drop 50% to match the 50% increase we've had since the 90's (actually, I think it's higher). This is incorrect. A 50% increase is actually wiped out by a mere 33% decrease, since we are talking 33% of the higher number and 50% of the lower number. A 50% decrease would therefore wipe out a 100% increase, which makes sense since a 50% decrease is half and a 100% increase is double.
So, my long term strategy remains the same: Save money like there's no tomorrow (a little time preference humor there for you), and when I can buy a reasonable house for 15% or 20% down without wiping out my savings or stretching my monthly budget too far, go for it. Whether that comes from increased income, more assets, or lower house prices makes no difference.