Expect to see major deflation across the board!

Here is a perfect example-  Lady across the street from my old home bought her house for 250k in 1997.  It was appraised for 850k in 2006.  So she took out a mortgage against her house for 550k to go buy a vacation home.  Her husband divorced her and she ended up getting foreclosed on.   The bank went in and listed her house at 850k after the sheriff sale.  No one was interested.  They lowered their ask to 750k, no one was interested.  They lowered it to 650k no one was interested.  They lowered it to 550k-no one is interested.  Now they have it listed at 475k for last 3 months and no one is interested.  

Now let me explain-  this house sits in an excellent neighborhood,  has a beautiful outdoor pool, beautiful landscaping,  5 bedroom home, 3 full baths, finished basement with half bath, living room, dining room, kitchen.  No damage in the house.  This woman was a nice Italian lady who just packed up and left without destroying that house.  
Eventually someone will go in and buy that house and at what price?  I am betting probably around 325k.  When that house gets sold at 325k, all the houses in that entire neighborhood just plunged in value!   

Housing is not going to be the only thing that plunges hard.  The Wall Street Bubble will plunge after the New Year.  Oil Prices, Gas Prices, Gold will plunge.  Eventually, Cost of Living will plunge as well.  For example-  online shopping has become real big.  As it grows more and more,  corporations are going to contract their physical stores and save tons of money on their expenses.  Sure, that means less jobs but it also means cheaper goods.  And before anyone cries about the loss of Jobs.   Take Walmart as an example-  they pay minimum wage to their employees and their employees are all on welfare. No loss for them losing their jobs because they ain't losing much by losing it.  They actually gain more by being able to buy cheaper goods.  

You can't say we are going into deflation and give an example of real estate prices declining unless you say it was massive inflation from 97-06 where the house appreciated 350 percent. I think your assessment of 325k is probably a good estimate and historically that is what it should be as housing should increase at a rate of roughly 3 percent.