jsc173

Property Values Set to Fall 43% from Current Depressed Levels

A much more meaningful mean reversion discussion is the income-to-value ratio (e.g., how much of gross income we allocate for housing).

That ratio has increased steadily over time, so to suggest there would be a mean reversion based on price alone is not borne out by this more predictive ratio.

If the income-to-value ratio long-term trend holds firm, we are at, near or below the long-term trendline (mean) depending upon which market you want to discuss. Specifically, markets like Miami, Phoenix and Las Vegas are below the line.

In English, the average house in those markets is priced at or below its investment value (you can actually buy, rent and get positive cash flow).