Remember 2006? Home prices had climbed and everybody was feeling rich. The No.1 topic at parties wasn't "How are the kids?" but rather, "So, what is your house worth today?"

We all know what happened next. Prices plunged. In my Clovis zip code of 93611, the median price has fallen by almost a third in a year.

The good news is that it will likely return to 2006 levels. The bad news is that I could be dead when it happens, or at least retired.

"The recovery to price peaking...could be 12 to 15 years," says Marty Frame, general manager of Cyberhomes.com, a real estate valuation and information Web site.
I mention that because Cyberhomes and other data indicates that price declines appear to be reaching a floor as the gap between what people can afford and the values narrows.

Fresno-based analyst Robin Kane's comparison of local home prices to affordability shows the gap has narrowed considerably after the run-up in prices in 2005 and 2006 - and the subsequent fall.

A Cyberhomes forecast for 93611 shows a 31% price decline over the last year, a predicted 6% fall through May 2010 and a 2% gain the following year - for a net decline of 4% over the next 24 months. (Cyberhomes sells market data for neighborhoods; go to its Web site for info)

Almost 9% of all the loans in 93611 are delinquent or in foreclosure, and more bank-owned properties are expected to hit the market. But at least the jobless rate appears to be on the decline from a peak in January 2008.

Home sales are soaring, but more foreclosures are expected to hit the market later this summer, and interest rates have increased about half a point because more investors are exiting treasuries and buying stocks.

Sam Khater, senior economist at First American CoreLogic, thinks the worst is behind us, although we're not out of clear.

He notes that 39% - almost double the national average - of homeowners in the Fresno area owe more than their homes are worth. Combine that with an unemployment rate of 15.5% and you have a recipe for continued foreclosures, Khater said.

"Nationally, we expect prices to bottom by 2011," he said. "The worst is over in Fresno. We're seeing a firming of sales, but the hidden dark lining is that the firming in sales is distressed sales. They are clearing out distressed assets, but also propping up the housing market."