House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.
Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.
Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.
Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!
