So says Bloomberg Businessweek, here:
"[H]ouses are overvalued. From 1988 through 1999, median home values averaged 2.6 times the median annual income. As the bubble kicked into gear, prices pushed up to almost four times income. With the crash, that ratio has come down—but not far enough, largely because incomes have been stagnant, if not declining, in recent years. Home values are now at three times the median income—that’s 15 percent higher than they have historically been, relative to what Americans earn."
From the point of view of the Case Shiller Home Price Index, a 15% correction to the current index value of 136 would imply 115.
In the post-war period, we have witnessed 115 on the index in December 1982, March 1975, December 1973, September 1968, and December 1952.
