Housing Bottom... Are the Hardest Hit There Yet?

In response to my post on the relationship between price and quantity of existing home sales, Sami commented:

ListingSupply.com has been showing that the supply of homes for sale nationwide has been dropping for several months now. I think home prices in the hardest hit areas like AZ, CA, and FL are pretty near the bottom.

In taking California as an example, I am not as sure. While the price has indeed fallen dramatically in both nominal and real terms, we see that is has still not corrected all the way in real terms. While I am not suggesting that home prices will fall another 40% in nominal terms, I wouldn't count it out over the next 5 or so years in real terms.



Though I will say that the second derivative has definitely, turned positive.

Source: S&P / BLS