I probably nailed the sub-prime lending suggestion given the situation with the lenders (since most were apparently in the sub-prime business in one way or another). See Citigroup chart and compare the July/09 price to now.
On the other hand, a recent NYT article suggested that a rising tide of foreclosed homes is still waiting to hit the market.
Therefore, I have re-thought the timing on the builder/developer suggestion. In fact, given the amount of inventory and so-called "shadow-inventory" out there, it might be another three to five years before you should consider buying home builder's stock, as the economics still have to be poor.
What you might want to consider, however, in the next 12-30 months, is direct home buying. I think by later 2012, almost all of the declines will be behind us. Population growth and household formation are still factors affecting the housing market. However, the severity of the housing bubble and subsequent recession have hidden the importance of these factors in the short run. While the first factor (population growth) tends to be reasonable stable over longish periods, the second (household formation) will be positively impacted by continued improvement on the unemployment front.
If you can pick up a cheap bank-owned REO or two in the next while as an investment, I think you'll be sitting pretty in five to ten years.
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