Looks like prices dropping never ends?!Does anybody knows the answer?

Prices in Los Angeles only look like they have leveled off, due to the State government tax give-away.  When that ends, then prices can continue to adjust.

Of course they will continue to adjust until they reach the market equilibrium point.  Of course we can't be at market equilibrium if the market is propped up by temporary government intervention.

Of course the drop will end; it is an exponential function, and if you look at the rate of change, and when the rate of change approaches zero without intervention, then it should be at the equilibrium point.  But as Dan pointed out, there is a lot of underwater loans and excess inventory that has to be dealt with before equilibrium can be reached.

As for the extra dollars thrown into the economy; none of the present government intervention is putting any where near as much artificial money in the economy as nothing down loans on bubble equity property that occurred over the past decade.  The government is just trying to wean the people off of artificial equity spending.  And if people are reading Rich Dad, Poor Dad, and thinking that is how they will make their fortunes, they have been conned.

Here is what I know from a national perspective.

Bad mortgages will reset and recast through 2012. This is guaranteed as those loans can not be paid off then without modifications.

It can take a year (sometimes longer) to foreclose on a house in many cases.

We will have at least 1 year of inventory. Some say 2 perhaps more. 

That makes 2012 the last year of major foreclosures. 2013 should have all those foreclosures coming to market (barring more government interference). 

You then have over supply for 1-3 years. That suggests (if the economy actually recovers and lending happens) that prices should start to increase (or at least remain stable) nationwide by 2015 or so.

There is one issue that could change the above. The federal reserve has almost doubled the money supply with nothing else behind it. That means they printed enough paper to turn a $20 into a $10 for purchasing power. IF they can remove that money before it is spent nothing bad happens. BUT IF instead that money starts to be spent hyper-inflation could occur. That could drive interest rates to 20%, maybe even 50% or higher. That would destroy buying power. 

IF wages increase as much as hyper-inflation takes away it will bring house prices ($$) up. If wages remain low as now house prices will fall like a rock. However, do not expect house prices (years worked to pay for a house) to go up dramatically any time soon. 

House prices basically mirrored inflation until about 2000. Then they jumped up in an unsustainable manner. We have had about 30% inflation since 1998. If you find house prices are more than around 30% higher than 1998 they are overvalued still. It if strange, incomes also went up by about 30% since 1998. Maybe that shows the real value of a house. The ratio of house price to income decides what is really affordable. 

When prices are going up, it seems like they'll go up forever. When they're going down, it seems like they will never stop.

We have leveled out in LA. Real Estate is all local...

Competition in our market (Appleton Wisconsin) is becoming a balanced market. Very slowly but it seems to be leaning in that direction. Time will tell. Like the stock market nobody knows the exact bottum.