I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.
Rich Toscano’s charts which he posts here are very eye-opening. See here:
for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.
BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).
