The knife is still falling on US home prices

Ready to buy a home? You might cut yourself on the falling knife. I have been hearing a lot from the real estate cheerleaders(my RE broker, mortgage brokers, people trying to sell their homes) that real estate has bottomed out, and we are turning the corner. I think they are dead wrong. There are a whole bunch of prime ARMS to reset over the next 2 to 3 years. People are still losing jobs, and interest rates are at artificially supported lows. Many banks are trying to avoid foreclosing on non performing loans because it is better for them to have a non performing loan, than an REO in inventory. I know someone who hasn't paid on a vacation property in over 2 years. They still hold title to the property. I have another friend who due to illness and job loss hasn't paid their mortgage in over 18 months. They are still living there for free. Things are so bad the banks can't keep up with the defaults. I've been working on a short sale for over 6 months. I've been waiting for a final approval for over 3 weeks now.
The media likes to paint a rosier picture because the government is encouraging them to try to reinstill consumer confidence, they are even giving you 8 grand if you buy a home today, but truth is it is going to get a lot worse before it gets better. If things weren't so bad, why would they have to give an 8 grand credit to convince you to buy a depreciating debt trap????There are many many more foreclosures to come, and if interest rates were to go to 6.5% to 7% prices will really tank because as the price of borrowing money goes up, the value of the asset been borrowed against goes down. It is much wiser to buy a cheap property with an expensive loan, than an overpriced property with a low rate loan. Prices will continue to fall until all the foreclosed properties are sold off. I see prices falling for another 3 years or so and then going sideways for another 10. If rates go to 7 or 8% the knife will drop hard and be very sharp causing a lot of pain.
I plan on buying 30 or 40 properties to add to the rental portfolio sometime down the road. It is possible to negotiate 40 to 50% discounts on short sales or REO's right now, and the cash flows are starting to make sense again. I'm just not quite ready to jump in the pool yet. I'm sticking my foot in to test the water, but I don't think I need to be in a hurry to catch the wave. I think there will be more properties available, at better prices a year or 2 out.