An appraiser in nearby Rockland County has done an analysis on the price changes to a typical raised ranch in his town from 1965-2008. You can see the results here on the board's online newsletter. Once you hit the link, scroll down to page 5. The results are very instructive. In the last bust (1987 correction, Savings & Loan crisis, stock market crash of 1987, early 90's recession), it took until 1998 for prices to get back to the prior peak of 1986. Prices declined for 5 years, then rose nil to very little for another 6 years.
This Great Correction is a doozy compared to those times. The drop of prices from 2007-2008 of 11% is historically unprecedented, and I wouldn't be surprised to see another decade of malaise. It is irresponsible to believe that things will be better in 18 months; we still have billions if not trillions of bad debt to wring out of this economy. New York Home sellers need to understand that they are competing with short sales, bank-owned foreclosures and other distressed situations and that their best chance of selling is to price their home as competitively and aggressively as possible.