You are right about house price appreciation being directly related to income appreciation. Chris Thornberg (formerly UCLA Anderson Forecast) always pointed out that two studies showed a .01% and .02% increase in house prices adjusted to income. The .01% study used 400 years worth of house prices.
Thornberg was one of the few economists that predicted a recession. He predicted a change of one at UCLA (because of politics), and he flat out predicted a severe recession in his first forecast at Beacon.
