If you analyze the house prices in "fast-moving" economies (bay area, nyc, etc.) you will see prices have corrected rapidly. However relative to the interest ra

If you analyze the house prices in "fast-moving" economies (bay area, nyc, etc.) you will see prices have corrected rapidly. However relative to the interest rate, these asset prices are still somewhat inflated. However due to the cash-heavy nature of buyers in these specific markets, you can expect less correction relative to interest rates as cost of borrowing is less of a concern. Now move out to more desirable places to live (say, San Diego with it's great sunshine) and you will see asset prices are blown way out of proportion. This is a very geo-specific asset class, so you will have to look relative to the geo. Unfortunately or fortunately, it has a lot to do with the interest rates and inflation. What you will see is with the layoffs and for folks who have taken out ARMs to optimize the cost of borrowing, a lot of folks are in for a big wake up call.