On the decision to buy a home or rent a home, Barry Ritholtz brings some perpective:

Nationally, home prices remain somewhat elevated, but not absurdly so. The local region you are in, and the specific price you negotiate determine if you paid fair value or worse. Given the many variables, there are no broad declarations to be made that reflect every sale of every house. The answer to our title question (“Should You Buy a Home?”) is it really depends.

My biggest issue when it comes to Home prices is the lack of pendulum swing. All over-priced markets that crash typically swing to the downside until they not only achieve fair value but become cheap. Unfortunately, that has not been allowed to happen in the residential real estate market. The government’s HAMP/Mortgage Mods, the foreclosure abatement plans, the new purchaser tax credit, and even the Fed’s ZIRP have all conspired to prevent market forces from repricing homes.

If we want home prices to bottom, well then we must let them fall.