[GodGunsGuts]

First, as the article that got this thread going already demonstrates, housing prices are already dropping nationwide. But to answer you question, I think the following links give a pretty good indication to what degree housing is overvalued, and where:

http://www.housingbubblebust.com/Fed/GDPvsHSG.html

http://www.housingbubblebust.com/HM/HM-Metros.html

[Torie]

Nice charts. Now it is your turn to comment on their meaning, vis a vis our tete a tete, which frankly escapes me.

[poinq]

Your graphs show a sever bubble burst in New York, San Fran. and LA in the early '90s. I remember people who had bought houses in each of these markets. The burst was caused by the interest rate changes.

It took people 5 years to get back the value in their houses. And they had to sit in the houses, go bankrupt or leave them empty until they could sell them at or near their buying price.

A bubble burst only moves down the price 10% or 20%. The factor is tied to the rise in interest rates because that is the real cost of ownership.