Housing Prices Still Overheating

A study just released here: Global Insight: 1st Qtr. Housing Report shows that the amount of housing in America that is overpriced markets is rising, rather than falling. This is despite the softening of house prices. Typically home prices fall by about half the level of overvaluation, and the adjustment takes around three years.

So we are only at the beginning of the softening process, and some areas such as California and Florida seem to be set for some hard declines. Since real estate has been such a large part of economic growth this news should act as a caution sign to anyone predicting long lasting strength. Looks like a good time to save and wait for prices to weaken!