The housing-income imbalance

Key graf in the WSJ's story about the latest Case-Shiller housing numbers:

…the recovery of the housing market is likely to be a gradual process.
That's partly because the boom left prices so far out of whack with
incomes. As measured by the S&P/Case-Shiller national index, home
prices jumped 74% in the six years through 2006. During the same
period, U.S. median household income rose 15%. (Neither figure is
adjusted for inflation.) That made housing unaffordable for many

Amazingly, the people with a vested interest in sustaining the housing bubble see this as good news:

The silver lining behind the latest home-price data is that they signal
the market is making what most economists see as a necessary
adjustment, dragging home prices back into closer alignment with
Americans' ability to pay. The market is working its way "back to
reality," says David Seiders, chief economist of the National
Association of Home Builders. He thinks house prices will bottom out by
early 2009.

For a more realistic assessment, check this out . 

The Daily Reckoning