IMHO, here are some additional reasons not to get too excited about housing, for now.

Already mentioned previously – johnny one note says unemployment is rising.

Under-employment is rising – not shown in headline statistics. 9% forced time off for CA employees. That’s a 9% salary reduction. This will be much more prevalent down the road in both local govt and businesses.

Wages are stagnant or falling. If the trend continues, the old housing price to income ratio should still hold, but in this scenario, housing prices will be more depressed than expected.

A gap is developing in the move-up sector between the middle and upper housing price tiers. With no demand to drive prices higher in the upper tier, the most likely scenario is falling prices in the upper sector.

The stock market has fallen almost 50% off the peak, IRA’s and 401Ks are decimated. Today stock market is down 5% and pushing on the recent lows. The wealth effect produced by the housing and stock markets is severely reduced. This just can’t be good for massive purchases like housing. That being said, the baby boomers will probably be forced to keep working and stay in their homes for a few more years (keeping supply a bit more muted).

IMHO, there will be a time to make the plung into the high end, but now is not the time.

I in advance apologize for something that may appear a ramble.