Lori, the plural of anecdote is not data. For a true analysis from Standard & Poors, see this article:
We find some evidence of overshooting in house prices in all of the regions we studied.
Either subsequent house prices, rents, or both support the overshooting hypothesis
depending on location. Our analysis also supports the view that house prices do most
subsequent correcting, relative to rents, in the re-establishment of long-run fundamental
equilibrium as measured by the rent-price index. Rent-price sensitivity coefficients are
higher, on average, in our house price regressions than in our rent regressions. Furthermore,
there is a consistency of response to over- and under-valuation among house prices across
the nation, namely that prices overshoot. But for rents we found regional differences in
behavior, with overshooting occurring in most, but not all, locations.
As Exhibit 3 shows, our rent-price index indicates that periods above or below long-term
fundamental trends can be quite prolonged. Overshooting is also not a one-way phenomenon
and occurs on the downside as well as the upside as all mean reverting processes do. With
respect to the current environment, though house prices have already corrected quite a bit, it
would not be surprising to see continued weakness in housing markets for some time to