...If the prices go down further, my profits will only go up more and like many RE investors will snatch them up before that happens. Essentially if prices drop more, demand will skyrocket, supply goes down, value goes up...you guys know the routine.
...if there is enough "RE investors" that can afford them, that is... which is questionable, in the economy that is strapped among others, by unaffordable real estate prices. Secondly, what is happening to rents, when there is a rush of "buy to rent" investors? I am telling you, it happened here in Ireland, too, and my rents are only going down from the top of the boom, and landlords are more than happy to further lower rent, if they have good tenants.
Lets's just follow your example. You said $400k, $600k houses... I say, WTF?!?!? Half a mill dollar, +/-, for a freaking HOUSE, and this is supposed to be a bargain? Who can afford that? What are median/mean family incomes in your state? What are their respective credit abilities for a house (they also need to pay other bills, save some (big?) for kids education/own retirement/rainy days, etc.)? In my book, we are talking about the income that would be AT LEAST 200k+ (and better, more like ~300k), to safely, and reasonably afford $400+k house - without stretching oneself too thin, or risking too much, or committing to a very lengthy mortgage (in which case, the cost of paying the interest, is not cost effective at all)
It is still not adding up in my book - but I might be wrong, sheeple might turn out to be happy to take on 50-years mortgages etc., that would make my points moot.
My point is, your average middle-class families cannot afford middle-class homes anymore - if we talking prudent financial planning, and not assuming/taking for granted, that their income "will increase in the future, and house value will increase, too". They cannot afford it TODAY, so they HOPE they will be able to afford it tomorrow. But hope is not prudent investing, IMHO.