40% more to fall...

Discouraging news on the housing front from yesterday's WSJ (subscription required):

Median (home) prices in California peaked in 2006 at 13.3 times per capita incomes. Hard to believe, but true.

They may be down now to about 11.1 times. But that's still way above the ground. Throughout most of the 80s and 90s they ranged between six and seven times incomes.

Just to get down to seven times incomes, prices would have to fall 37% tomorrow.

Those who bought at the peak of the cycle may be pinning their hopes instead on "incomes catching up" instead. But they had better be patient. Even if house prices stayed exactly where they are, it would take around 10 years for rising incomes to bring the ratios back into any sort of alignment.