Given that the distribution of income in the United States follows a log distribution, can begin to understand how the presence of a few thousand millionaires begins to skew the numbers.
The reality shows that it will be a couple more years. Political Calculations had a good graphic on it:
The housing bubble will finally be deflated when that blue segmented line meets the dashed green line. But that may be a while. Housing prices are sticky, there has been some massive Federal intervention, and there is a huge 'shadow inventory' of bank owned homes that aren't even on the market yet.
But have hope--the crisis part of things is over. Prices are showing a 'steady' oscillation pattern, and the inflation adjusted housing price should meet the trend line within a couple of years.
But an undershoot remains a very real possibility. The years 1997 to 2000 seems to have been a 'reversion to mean' period, followed by the frantic escalation between 2000 and 2006...at which point the 'teaser' rates on ARM mortgages began to reset, and mortgage defaults began, coming to fullness only in 2008. Historic undershoots of the trend line look to have been in the 8-10% range, and it's not impossible we might see that again. Still, it's been almost two decades since we've seen that much amplitude in the oscillation of housing prices.