House market is a market, so it will also have top and bottom. Since the house market has toped probably last July and has just started going down, it will take some more time to reach bottom, maybe in 3-5 years or longer. Since house price increased 2-5 folds in last 5-8 years depending on the locations, I believe that house price will at least drop 50% in next five years. The meltdown of the house market will need some catalyst like the subprime loan, which will create proper selling climate. I think you will soon see house price decline in next a few months nationally. As to your neighborhood house price, the situation may be a little different. Just like junk stocks drop first in bad market and good stock can still hold for a while, California houses are hot assets so the price will go down slower and less than national level. But California house will still dive ultimately. The current rapid and nationally-leading increase of foreclosure is a good indicator of that.