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According to this report from late 2004, certain housing markets look like they are ready to drop in price.

According to PMI Mortgage Insurance,

Of the country’s 50 biggest cities, homeowners in San Jose stand the greatest chance of seeing their homes plunge in value . . . San Jose, Oakland, and San Francisco are three of the top five MSAs at the top of the risk index list.

The housing bubble in California may finally be ending. We Americans are spending every dime we come across, so much so that our savings rate this year may be the lowest since the Great Depression. With all these adjustable-rate mortgages, housing costs are going to rise in the coming years. While nominal household incomes in some California markets are up a nice 6-7% over 2003, they’re stagnant (and thus in real terms, they’re falling) in other housing-bubble cities like San Jose, Las Vegas, Phoenix and Washington, DC.

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