What Goes Up Must Come Down?

Is the housing market about to rebound?  I don't think so.  There's some good news: by a number of measures of value, houses are actually fairly priced.  But generally, what goes up too high in financial markets tends to plunge too low.

Exuberance is not the only irrational investor emotion.  I love "The Big Picture" blog (link).  Awesome analysis here and cool chart as well from the site: (Visit the Blog for a nice blow-up version)

Bottom line: house prices in the US are coming back into line broadly with income.  Two problems:

1. We haven't undershot - which we usually do after a bubble
2. Incomes are gong up at a snail's pace right now