Harvard State of the Nations Housing Market to be released Monday

Tomorrow the following link should point to the 2008 version of "The State of the Nation's Housing 2008" by the Harvard Joint Center of Housing Studies.

Here is the Reuters preview:

Record foreclosures and limited access to credit will make it harder than usual to rebound from this U.S. housing market slump, the worst at least since World War Two, according to a Harvard University study on Monday.
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"As investors demand a higher return for assumed risk and limit credit to riskier borrowers, costs are rising for all types of mortgage, consumer and corporate loans," the center said in a press release. "Many would-be borrowers are now finding it impossible to get loans at any price."
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To get home affordability back to levels of 2000, before a five-year record home price and sales surge, "would take some combination of large price declines, interest rate reductions, rent deflation and unprecedented real income growth," the study said.
Even then, homes were out of reach for many "vulnerable households" often made up of low-wage workers, families with children and veterans.

What I think is amazing is that credit availability is still very good. FHA and the GSE have looser standards now then in 10 years ago. Credit is only tight relative to the banks giving away money to anyone who asked during the boom. But documenting income for loans and requiring a modicum of down payment requirement will ensure that prices return to levels commensurate with income. A return to affordability can only be had through price declines, interest rates are at their historic lows and won't be able to make up the difference between current prices and incomes.