Following the Federal Reserve's announcement of a plan to buy up $500 billion of mortgage-backed securities issued by Fannie Mae, Freddie Mac, and other GSEs, plus an additional $100 billion of debt, interest rates on 30-year fixed rate mortgages dropped below 6%. In light of the news, Credit Suisse noted that a 1% decline in mortgage rates equates to a 10% decline in housing prices with respect to affordability. However, it went on to add that such changes typically take nine months to a year to result in improved sales numbers. As such, Big Builder launched an online survey to determine the sentiment of its readers with respect to the news.

When asked how long they expected it to take for the housing industry to see a bottom, there was hardly a consensus, with an even 25% of respondents selecting less than nine months, nine to 12 months, 13 to 18 months, and 19-plus months respectively.

While one respondented noted, "We are currently seeing a turnaround in traffic and contracts," most others pointed to a market flooded by new and existing inventory, as well as an impending wave of adjustable-rate mortgage resets beginning in mid-2010 and a lack of consumer confidence in general.

As one reader put it, "Everyone is kidding themselves. This is only the middle [of the downturn], and everyone is to blame. Greed got the best of everyone ehre, and we will all be paying for this for years to come."

Previously, Credit Suisse had predicted a 15% decline in home prices in 2009. However, in light of the recent drop in mortgage rates, it stated its current belief that the damage could be limited.

While one in five respondents said they expect prices in their markets to fall 5% or less, 45% said they expected a 6% to 10% decline. A quarter of survey respondents expected a decline of 11% to 15%, while 5% of respondents each said they anticipate a drop of between 16% and 20% and more than 20% respectively.

The most optimistic of respondents operate in the Carolinas, New York, Houston, and Santa Cruz, Calif. Those who expected a 6% to 10% decline in prices build in the Chicago, San Diego, and Boston markets, while the builders expecting a rougher road ahead represent Orlando, California, and the state of Washington.

Added one respondent, "Markets such as Phoenix, Las Vegas, Los Angeles, and Miami still have more significant price erosion ahead."

Learn more about markets featured in this article: Los Angeles, CA.