Recovery time in past real estate bubbles

"The National Association of Realtors found 23 percent of homes sold in 2004 were bought by investors. ...David Berson, the chief economist for mortgage finance group Fannie Mae, notes that the level of investor ownership of housing hasn't been this high since the late 1980s, which led to a crash in housing prices."

Like millions of home buyers and sellers, a recent article in Yahoo asks, "Is real estate another bubble ready to burst?"  Noting that experts are cautiously watching the market and remain divided on the likelihood of a crash, the article highlights the role of housing speculators in current and past run ups in real estate prices, and one economist concludes:  "the risk of regional home price declines is higher as so many purchases are by speculators rather than residents."

At least one blogger agrees, writing:

And I don't know how many times I've heard that "prices may stagnate, but you won't lose money." In 1988, a man drove up to my parents' house in Queens, and offered my father 500K, cash, for the house. Four years later, it would have been difficult to get $325K ...for that house, and it wasn't worth 500K again until 2001.

Think he is exaggerating?  Last Fall, an article in the Economist Magazine predicted that the it could take parts of the US as much as eight years to recover from the current imbalance in the overheated housing market.  As hard as it may be to believe, that was the experience of some buyers in Somerville neighborhoods in the late real estate cycle in the Boston market.

If you are looking for a house now, how many years are you planning to live in the home or condominium you hope to purchase, and what are you doing to protect yourself from a gradual or sharp drop in housing values?