Home Prices have bottomed, perhaps. Exciting chart posted here.

[meme_IHB]

I finally found my source on nationwide median home prices, at least going back to 1968. Apparently the NAR only started keeping track of this data in 1968, and so it is probably utterly impossible to find median existing home prices from before 68.



This is a graph of home prices divided by median family incomes, which should be useful as presumably home prices are based on how much money people actually make and can therefore afford to spend, not on inflation or other such things. Note that there is a difference between "family income" and "household income", and that family income tends to be about 20% higher than household income. This is because "household income" as a statistic includes households with only 1 person, while families tend to consist of couples, with both people often working.



<img src="http://i43.tinypic.com/oixgnc.jpg" alt="" />



While the home price/income ratio seems to have reverted to the norm, this doesn't actually mean that prices have bottomed. There is no reason why prices can't well overshoot the bottom. And, note that I have estimated today's median home price at $180,000. If you want to assume it's lower, you'll get an even lower ratio for the end point of the graph.

 

[Geotpf_IHB]

Nationwide numbers are fairly meaningless, IMHO. Even during the bubble, housing wasn't that expensive (as compared to incomes) in "flyover territory", for the most part. One of the things that happened with the collapse is that the size of the expensive areas got smaller. That is, during the bubble, prices in places like the Inland Empire soared, because they were kinda sorta vaguely geographically near the expensive places (like Irvine). But now the IE is back to "flyover territory" prices, while places like Irvine have dropped by a much lower percentage.

 

[meme_IHB]

[quote author="Geotpf" date=1244195902]Nationwide numbers are fairly meaningless, IMHO. Even during the bubble, housing wasn't that expensive (as compared to incomes) in "flyover territory", for the most part. One of the things that happened with the collapse is that the size of the expensive areas got smaller. That is, during the bubble, prices in places like the Inland Empire soared, because they were kinda sorta vaguely geographically near the expensive places (like Irvine). But now the IE is back to "flyover territory" prices, while places like Irvine have dropped by a much lower percentage.</blockquote>


Nationwide numbers are meaningful for the overall economy, for what they're doing to the banks and everyone else who ended up holding the mortgages on homes which are now often worth considerably less than they were bought for.



But of course, each individual market is different. Some are properly priced now, some are bound to go up in the near future, while some are going to be dropping by a long way.

 

[IrvineRenter_IHB]

The chart may be useful to mapping out the degree of downside overshoot. Many areas are approaching a fundamental bottom, and there are no signs of stabilization. Also, interest rates on mortgages are starting to go back up.

 

[25inIrvine_IHB]

[quote author="IrvineRenter" date=1244248708]The chart may be useful to mapping out the degree of downside overshoot. Many areas are approaching a fundamental bottom, and there are no signs of stabilization. Also, interest rates on mortgages are starting to go back up.</blockquote>


I was about to say the same thing. Looks like to me like the trend is still going down, and going down fast. Even if the rate of decline slows that still doesn't mean a bottom is there.