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As the coastal real estate markets have reached their pricing peak, the mainstream media has finally noticed. They are  transitioning in their coverage from  boom stories to stories of moderation. Of course, in about 6 months the  major media outlets will be making  the most  pessimistic bubble bloggers look optimistic. At that point, we probably will be very close to the bottom of the market.

In Los Angeles today, the median dream goes for 10 times the median income. That’s unsustainable no matter how creative banks are in coming up with new hybrid loans.
Mayer thinks that, with fewer people buying but plenty still hoping to cash out, prices in the most expensive markets could drop 15 percent in the next year, if mortgage rates rise another point. The forecasters at Fiserv Lending Solutions and Moody’s Economy.com, who crunched the numbers for our 12-month nationwide forecast, aren’t so pessimistic, but they’re hardly Pollyannas.
Prices will flatten in most ex-boomtowns this year, and next year will be worse, says David Stiff, Fiserv’s chief economist. “A lot of markets - particularly those where prices have increased dramatically compared with income - will see drops by late 2007,” he says.
Those declines are expected to range from a few percentage points in Boston to as much as 20 percent in Miami and Las Vegas, says Economy.com’s Mark Zandi. The more unhinged prices are from local incomes, the more likely a fall.
That doesn’t mean, however, that real estate is about to crash across the United States.
First, if you live someplace that hasn’t gone wild - think Atlanta or Philadelphia or just about anywhere in the Midwest or Texas - you’ll see slower rates of increase, but losses aren’t likely. “There are sizable parts of the nation’s housing market that will be just fine,” says Zandi.
Second, a strong economy and job growth should hasten a return to a normal housing market in which prices rise just a bit faster than inflation. Since World War II, notes Stiff, the housing market and the economy have moved largely in sync. via MONEY Magazine

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