If you go to buy a foreclosed house, ask for a 31% discount

What, exactly is "nominal market value?" It sounds like one of those models, which have been highly dubious in the real estate industry lately.

It seems to me that comparisons to insane peak of 2005 or to the sliding slope off the insane peak do not make much sense. What about comparisons to adjusted for inflation relatively sane numbers of 1997 or even 2000? See the graphs below
-
http://bp3.blogger.com/_odwu_bJENb8/SGFtO3LxcoI/AAAAAAAAA8c/CXZuQg2y7t8/s1600-h/Case+Shiller+inflation.png

http://bp1.blogger.com/_odwu_bJENb8/SGFtVm2MTUI/AAAAAAAAA8k/5Hc2yHfTY4M/s1600-h/Case+Shiller+20+inflation.png
-
According to the lower graph we were still somewhere 40% above sanity levels in early 2008.

I have posted about this on this blog before, because I moved last fall, and looked a a LOT of foreclosed houses. Banks seem to go out of their way to just destroy the value of the homes. They appear to uniformly turn of heat, water, power and electricity and both dry and cold climates --destroying all landscaping, and often causing damage inside the home.

There are no caretakers for the homes.

In general, foreclosed houses require a LOT of work. Consequently 31% is rational.

Now, all you foreclosure fundamentalists --tell me the bank wouldn't have been better off cutting the mortgage payments and keeping the previous resident in the home.

It's just one more piece of "moral hazard" absurdity.

@tc125231 - "Banks seem to go out of their way to just destroy the value of the homes." I am sure they are doing it on the advice of their own deep thinking "economists".