Housing revisited

Coincidentally, I was referred to two housing bubble reports today. This one is from FDIC, and these are slides from a talk by NY Fed VP Richard Peach. The latter is remarkably sanguine - it seems to say that price to rent and price to median income indexes are off because they don't adjust for improving quality of units sold (for instance, increased median square footages, etc. - sounds to me like the "hedonic" adjustments in the CPI that Bill Gross is suspicious about). Once that adjustment is made the housing market doesn't look overpriced, at least nationally. The Fed report also claims that while many buyers are motivated by low interest rates, few are buying in anticipation of near term price increases (classic sign of a bubble).

I guess I'm skeptical, and in any case there is a big difference between a national housing bubble and one in selected markets like CA, Boston, DC, etc. You can read the reports and decide for yourself...