The housing market is fickle and it has needed a correction for a long time. The cost of labor is over-priced. There are general contractors out there that are living on seven figure incomes and many of them have no college education at all.

The storm hasn’t run its course quite yet.

Price-Income ratios, Price-rental Ratios, Inventory, Savings Rates, Mortgage Cost and Availability. These are what matter. Anything else is just bubble talk.

I was led to believe that median house prices are related to median individual income at a ratio of 2.5 to 3. Median income is about $49k so median house price should be about $122k tops (optimistic level based on recession, inventory, lending). Basically another 30-35% drop before we can even think about bottoming.

I would appreciate feedback on my income and house price numbers? Am I using the correct income?

That attitude is ruining our country.

Judge a person’s intelligence by the cogency of their arguments, not their net worth.

When is that stupid bitch not “optimistic”?

Yeah, housing is going to bottom, I guarantee it, just don’t think its gonna happen real soon. And while we wait for that disaster to head into the past, future problems are pounding on our front door faster and faster. And, with the next election providing us with the leadership we deserve….

Makes you understand why the superhero movie summer is in full swing, our last refuge for hope for the future….fiction (just for clarity, that’s a reference to the movies, not the political campaigns)…

Lewis in East Tennessee

You think the government should take care of you from cradle to grave – free food stamps – free health care – free tuition – free mortgage bailout – free oil – no wait – that ain’t happening.

The number one economy-killer – high oil prices. The cure? The Democrat-controlled Congress now run by a bunch of former 60s drug using addled-brain hippies are more concerned about the environment than you, your family, your home, your job and the US economy by preventing increased drilling for domestic oil and the construction of sorely-needed oil refineries.

How about free gasoline vouchers? How about half the population of the US die off to lower the demand for oil all “for the children” and to “save the environment”?

This would be the result as we all wait for a slow painful death before “alternate” forms of energy replace Al Gore’s hated internal-combustion engine. Save the Polar Bear!

I think they are optimistic, although not if by “sales recovery” they mean rate of sales only with no counting of price of comparable. Prices will keep declining. Even Mr. Yun will notice sometime in 2009 (Q2? Q3?) that prices did not recover an iota in 2008.

2. Without doubt, Case-Shiller understates the situation.

- Only includes sales that went through, does not reflect unsold comparable inventory that in a declining market will sell for even less.

- Condos are excluded. The national vacancy rate for condos is 5x that of single-family homes (3% vs. 15%) and thus the market is more depressed. My guess is that there was proportionately more speculation in condos than in single family structures.

- REO’s and outliers are excluded.

- Downweighting of more aged sales pairs implies a slight bias toward newer construction and thus deemphasizes properties where the earlier sale was at the absolute peak

- Exclusion of developer sales misses the huge decline in new home prices. (The average developer is smarter than the average home seller and wants to get out quickly rather than hold on to a declining asset.

- Increasingly, the lack (I am not 100% certain of this one) of inflation adjustment further understates the true decline.

It may be about the best metric we have, but it is undoubtedly skewed so as to understate the actual drop in values that is occurring in most areas.