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More signs of housing market stability

According to the Case Shiller folks, housing prices in real terms in the top 20 U.S. markets have been roughly flat since the first quarter of last year. Real home prices have fallen 35% from their early-2006 peak, while over the same period 30-year fixed conforming mortgage rates have fallen by a full percentage point, reducing the cost of financing a home by 17%. Price adjustments of that magnitude are hugely significant in my book, and it would appear that they have been large enough to clear the market—large enough to deal with the oversupply of homes, and large enough to compensate for the effects of the recession on family finances. We are four years into this adjustment process, and that is a lot of water under the bridge. Unless there is another unforeseen shock to the system, it is very unlikely that prices will fall further. It's time to move on and stop worrying about the housing market.

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