It's easy. You need only a few things: the median family income, the median single family home price and an online mortgage calculator. The underlying theory is simple: incomes and available lending leverage drives home prices. Let's do Las Vegas for example. 1. Find the median family income. It varies depending on source, but $56,000/yr came up, and I ran with that number. 2. Assume that by 2008 that traditional 10% down 30-yr financing is the only thing that lenders will touch. Forget ARMs, no doc, no downs. 3. Plug $56k and 10% down into an online mortgage calculator. Max home price at those terms = $210,000. 4. Compare affordability to current real estate median price. Currently for Las Vegas it's about $295,000. 5. Market price has to fall to meet the bid. Therefore, the median home will need to drop from $295,000 to $210,000 for the market to function normally again. That's about a 28% drop from today.