It happened sometime over the past month or so. Few noticed; fewer celebrated.

This, though, is a pretty big deal: The ratio of nationwide housing prices to median income is now below the long-term average.

Housingpriceincomejune

Sources: S&P Cash-Shiller, Census Bureau, and author's calculations.

Of course, nationwide statistics aren't terribly relevant to any one person. Local markets range from dirt cheap (Las Vegas) to still pricey (Seattle). Taken as a whole, however, the housing market is now -- and really just now -- at a level we can safely call affordable. Or rational. Maybe even cheap. An average income can now purchase an average home. This is the first time that's been true in years.

So what happens from here?

Who knows. Forecasting home prices is just as fruitless as it is for other market -- even more so, actually, since it's a highly leveraged, highly meddled market. Still, there's reason aplenty to think prices have more withering to do.

Home prices, like all markets, are guided by supply and demand. Demand is how eager we are to buy. Supply is the number of homes available for sale. Average monthly sales divided by homes available for sale gives a months-of-supply figure, which is provided by the Census every month. The current level, 6.5 months, happens to be fairly close to average. That's the good news.

The problem is what happens after adding in so-called shadow inventory. Shadow inventory is the homes that should be for sale, but aren't. The biggest contributors by far are banks. Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), and JPMorgan Chase (NYSE: JPM) all hold a glut of homes stuck in limbo somewhere between foreclosure and being placed on the open market. Analytics firm CoreLogic estimates there's now close to 2 million of these homes in shadow inventory, representing a nine-month supply. Add that to the official inventory of 6.5 months, and months of supply explodes far above healthy levels. Simply put, too many homes are either for sale, or are about to become for sale. This should put pressure on housing prices for at least the next year. Basic economics: It wins every time! 

Another impasse to recovery: buyers' mentality.

After bubbles burst, markets tend to mope around at a bottom for years while the wounds heal. It isn't until the nightmare is long forgotten before things perk up and a real recovery takes hold. It's like the old relationship saying: The opposite of love isn't hate. It's indifference.

As homeowners, we aren't even close to that point yet. A recent survey by Fannie Mae found that 67% of us think now is a good time to buy a home. Three-quarters think home prices will rise or stay flat over the next year. Two-thirds say homeownership is a safe investment; 57% say a home has as much potential as other financial assets. Almost 90% say owning is superior to renting.

All of these assumptions are questionable at best. Robert Shiller of Yale has shown that, historically, home prices return close to nothing after inflation. As I discussed a few weeks ago, the way mortgages amortize combined with the short length of time most of us own homes for often skews our perception of the benefits of owing vs. renting. A home should be an affordable place to live. Nothing more than that. The fact that so many Americans are clinging to bubble-era mentalities that can be easily countered throws cold water on the idea that we've changed our ways.

So homes are cheap. Just don't assume we're out of the woods. Bubbles that take years to inflate take years to heal.