Much has been made lately of falling housing prices and their negative effect on the American economy. What isn't mentioned so often is that the areas that are seeing some declines in prices now are typically areas, such as San Diego, which saw 25% rises in prices during several of the last few years. The link takes you to housing price year-over-year changes in twenty US markets. While it is undoubtedly hard on marginal buyers to see interest rates rise, it is probably much harder on them to watch housing prices skyrocket beyond the means of all but the most well-endowed Trustafarians.
The question going forward is whether we have seen the worst or whether there is more bad news to come. I have watched Jim Cramer call the bottom of the housing market at least twice now since last summer. The chart below may help to concentrate your mind, depending on your answer to the title question.