The answer is that yes, this time it is different: it's worse, because the Baby Boomers will be selling relentlessly for the next two decades. Demographics are against another housing mania as Boomers will be selling their real estate holdings to fund their hip replacements, retirement living, etc. Buyers from the smaller follow-on generations will simply not be numerous enough or wealthy enough to buy these millions of homes and vacation properties at anything close to today's prices.
There are three interesting features in the chart which suggest targets for both the housing bottom and the eventual bottom in valuations. Bubbles tend to rise and fall in symmetry, meaning that a bubble which took seven years to reach its apex typically takes about the same period to time to retrace to its starting point.
By that reckoning, the housing bubble which took off in 2001 and ended in 2007 will need about seven years to complete the retracement to historical valuations. That would put the bottom in the 2014 timeframe.
As for valuations, market watchers have long noted that "it's different this time" is a remarkably inaccurate basis for valuing anything. Thus we can look to the last deep recession in 1981-83 for some clues about where housing valuations may be heading: to about 3.5 times median household income.
This ratio of income to home prices is useful because it follows regional variations: higher income areas will have higher home prices, but the ratio will likely be about the same across the nation.
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