Start with a normal market.

Jack up demand by allowing millions of unqualified buyer/borrowers in with no income/lousy credit loans.

Watch prices skyrocket.

Purge those same buyer/borrowers through foreclosures and tighter lending standards.

Watch prices plummet.

End up with a normal market.

Where did we think prices would stabilize?

Prices probably still have a ways to fall in Sacramento. There's still an inventory glut in the market, even with the recent uptick in sales, and foreclosure activity could actually pick up next year, when another wave of rate resets hit higher-value mortgages. That means in addition to all of the (generally) cheaper subprime properties sitting on the market, there will be higher-end homes with declining values. That'll further suppress the value of the subprime properties - why buy Velveeta when you can get caviar for 10-20% more?

And if layoffs continue to mount you're going to find fewer and fewer folks even qualify for a mortgage, on any property. That could be a real issue in Sacramento, as the California state government needs to trim billions from its budget.

The fat lady hasn't sung yet.

with Neilpaul. Prices went up 30, 40 percent a year for several years. I think 50% haircuts in some of those markets might not be enough.

A regular family with two wage earners might be able to afford $232,000, though. That is something to celebrate.

But our median price dropped more, from a lower start. I posted here about this a week ago or so.

Anecdotally, the two couples I know who have been trying to sell their houses finally did. One, after a couple years, with a little profit. The other has been on the market for maybe a year and a half; it's going for $35K less than what they paid a few years before. So maybe we're done with the doom, and we just have a little gloom left to get through.

Anecdotally, my home has dropped at least 20% ($100k) since 2006, when I cleverly bought it. Another 20% drop on top of that is just brutal... (yes, I know it's a long-term thing, but my car isn't depreciating this fast).

No problem, with conservative 30% down 25 year fixed term. Since the median price in the US is right about that it should present no problem unless you owe a gazillion dollars on your credit card now.

California has a massive budget deficit. State, county and municipal workers will be laid off in the tens of thousands in an already weak economy. Then add to this the next wave of property tax reductions due to lower sales prices and the blow up of AltA mortgages.

Prices may have bottomed but it is really hard to see them actually rebounding any time soon. I'd say at least two years before they head back up, if, energy prices stabilize and that's a big if.

Not many American households have $69,000 to plunk down on a downpayment. Checked our savings rate lately? It's negative - a legacy of 30 years of right wing control and the bankrupting of America.

This is the first big wave of selloffs from foreclosures. Investors see the chance to snap up houses for 40% off, and take it. But they might not be able to unload those houses.

Just curious if anyone has seen any statistics as to the impact of the increase in FHA mortgage limits? The median price is well within the guidelines and if there was a positive impact, there is an argument to continue the higher limits beyond there scheduled expiration at the end of this year.

I hope that this will finally get it into the heads of some people that real estate is not a sure thing. I was really disturbed to see recently in my library's *new books* section yet another book recommending that young people buy homes (multiple) on interest-only loans because you don't want to throw your money away on rent, do you?

Scary. People need to get it into their heads that you should buy a home... if you want to own a home. It is not a miracle investment that against all good sense will increase in value at above-market rates forever. The market does not work that way unless you've moved to Lake Wobegon where presumably all the investment returns are also above average. We don't protect people who take lousy advice on stock picks, should we offer additional protection to people who took lousy advice on real estate?

My wife and I just closed on our first home in Sacramento. There are definitely some deals to be had out there, and we are very happy where we ended up.

That said, I'm not expecting our home to appreciate much over the next 3 years. The 40% drop in median pricing is more indicative of the bank owned discounting than willingness of sellers to accept the realities of the market.

The house we ended up buying was the first my wife and I had seen in three months that was not bank owned, yet priced competitively. The entry level market is going to continue to be much more active for a while, the move-up market is going continue to struggle because potential move-up buyers will be unable to get out from under their current mortgages.

I'm optimistic the next round of loan resets won't have too large an impact because the public builders have essentially stopped building. I'm also of the camp that the state budget concerns is more posturing to get higher taxes than anything else. Here's hoping, right?