Or at the very least behaved like one. You know what they say, if it looks like a duck, swims like a duck and quacks like a duck, it's likely a duck. I've covered some of these topics earlier but want to bring together some new factors that show that house prices are not sustainable and have been artificially inflated, along with some new charts to illustrate the point.

While I'm pretty good at math, I'm not a mathematician. What I can do is recognize and relate patterns. So there won't be any complex formulas as in a more advanced proof, but it should also be easier to understand.

I'm also going to try and debunk the myth that interest rates made house prices affordable, even though prices had grown so fast. Using conservative calculations a responsible buyer should use when deciding how much to spend on a house, it appears that in 2006 houses were selling for almost twice what the median household could afford.

CNNMoney.com has a list the 10 worst real estate market projections for the top 100 real estate markets. Eight of the top ten markets are in CA.

It's surprising that the NY Metro area, which contains Bergen County, NJ, is absent from the list, considering back in August New York City was the least affordable housing market. That was the first time the top spot when to a city outside of California.

With this region being so unaffordable, and with the decline in home values being less than other areas, it doesn't make much sense to me. Many areas in California and Florida have already seen dramatic declines in house prices. Some people have even tried to call the bottom in places like LA. According to these projections, that doesn't seem to be the case and 9 of the worst 10 housing markets are expected to continue to decline into 2010.

Back in May, CNN Money listed house price forecasts for the top 100 markets, where the NYC real estate market was projected to see house prices drop 13.2%.

There have also been some notable changes in forecasts since May. Sacremento's forecast had the worst change. The forecast dropped 13.3 percentage points to -22.2% from the -8.9% forecast in May 2008.

Miami showed slight uptick of 2.1 points in the forecast, going from -24.9% in May to -22.8%.

You can see the rest of the changes in forecasts in the table below:

 

	2008 Median House Price	2009 Forecast	2010 Forecast	May 2005 Forecast	Change from May 2005
Los Angeles,CA	$375,340	-24.9%	-5.1%	-16.8%	-8.1
Stockton, CA	$248,050	-24.7%	-4.0%	-16.8%	-7.9
Riverside, CA	$256,540	-23.3%	-4.8%	-16.9%	-6.4
Miami-Miami Beach, FL	$293,590	-22.8%	-6.4%	-24.9%	2.1
Sacramento, CA	$225,140	-22.2%	2.3%	-8.9%	-13.3
Santa Ana-Anaheim, CA	$532,810	-22.0%	-3.5%	-15.2%	-6.8
Fresno, CA	$257,170	-21.6%	-3.3%	-14.3%	-7.3
San Diego, CA	$412,490	-21.1%	-2.9%	-9.7%	-11.4
Bakersfield, CA	$227,270	-20.9%	-2.5%	-13.6%	-7.3
Washington, DC	$343,160	-19.9%	-5.7%	-13.2%	-6.7

Many of the bad decisions made by our government that allowed banks to run wild and create the housing bubble were done under the auspices of making housing more affordable and increasing homeownership.

Both President Clinton and President Bush had programs to increase homeownership.

But look at what's going on now. Part of the reason for the bailouts was to stabilize home prices and stop the steady decline. That's in direct opposition to the goal of making houses more affordable so that more Americans can own their homes.

In addition to the bailouts, the Federal Reserve has been drastically cutting rates so that lenders can make more attractive loans to keep demand for housing and house prices from falling further.

The foreclosure rate is still very high and nothing has helped. Obviously home prices and interest rates were too high for people to afford to stay in their homes. So why not let house prices fall so people can actually afford to buy?

Let houses naturally hit bottom. That's the only way for them to start rising again. Or did was all that talk about affordable house prices and increasing homeownership just a smoke screen?

Yesterday the August, 2008 S&P/Case-Shiller Home Price Indices came out.

According to the index, house prices in the area are still falling but not as fast as they were previously. In the NY-Metro Area which includes Bergen County, house prices fell .24% compared to last month and 6.92% compared to August 2007.

For comparison, the Composite 10 Index fell 1.10% compared to July 2008 and 17.72% compared to August 2007. The Composite 20 Index fell 1.03% compared to July 2008 and 16.62% compared to a year ago.

For the past 2 years, the NY Metro index has been falling every month except for June 2006.