Why the Housing Market is At or Near Bottom

[Sbane]

Why hasn't the 20 city composite come down to the national level? Supply constraints in high demand areas like NYC, Bay Area, parts of LA and OC? Although if we look from the peak, prices relative to rent have come down a little more in the 20 city composite than nationally. 

[Sbane]

And if anything rents have been rising. The rental and condo market are in much better shape than the SFH market.

[Sbane]

Once household formation begins taking off with 'Echo boomers/Gen-Y' cohort, than we'll see some sort of revival, but nothing like 2002-2006.

I wonder how long it will take for inflation adjusted prices to be as high as in 2006-2007. Probably never?

[Sbane]

Yeah, barring some other constraints prices shouldn't rise as much as they did, but they will to some extent. But I do think the bottom is more or less here, though I wouldn't be surprised if we stay around here for another 3-5 years with housing prices just bouncing around at the same spot. A decline in inflation adjusted prices perhaps. Do you think prices will fall in LA County and OC more, or will they stay relatively high due to demand? "Saving the hills" does help keep prices higher but in California, the topography pretty much makes high prices inevitable.

 For example, if the Santa Ana mountains weren't there, another freeway or large road could be easily built into Riverside County and housing prices would go down in OC. But building a road through the hills, even after clearing the environmental hurdles, would be a highly expensive proposition and would likely get saturated quickly in any case. Thus, we are left with the  mess on the 91 and the differential in housing prices between the two counties.