Numbers are a little off – I was clearing 4200/mo at a single filing status several years back when my salary was about 83.5K/yr.

Point taken though, and why I’ve stayed out of the housing market for so long. The fundamentals are still way out of whack, though they are getting significantly better. I guesstimated at the peak in ’05 that housing would have to fall about 40% for it to get back in line with San Diego fundamentals (of about a 4.5x median household income to price ratio), and we’ve seen about 25% of that drop. Still, the remaining 15% off peak is about another 80K or so drop from current median selling prices.

Hopefully after the spring “non-bounce” we’ll see more sellers getting realistic (and those that aren’t getting pummelled by the REO’s auction prices), and see more major depreciation this autumn/winter. I do expect the trend to hit the downside and go below the fundamentals, but I’ll be willing to buy once the market has returned to fundamentals (the wife wants a home, and we’re both sick of being renters, no matter how much financial sense it makes).

Of course, some markets are falling later than others – we’re looking at probably buying in some North County markets (W. Escondido near Del Dios, San Marcos, etc) which have seen a lot of air bled out already (proximity to my job is good from the N. County). Places like 4S and CMR, though places we’d like to live, are taking longer to adjust and we’re simply not likely to wait the extra 2-3 years for the depreciation to hammer those areas.