How Low Will Home Prices Go?

My younger sister Melissa and her husband Joe are ready to move.

Today the couple live in an apartment in New Jersey just across the Hudson River from Manhattan. At 33, Melissa's had it with city life, tired of dragging bags of groceries up steep flights of stairs, frustrating hunts for a parking space and worrying about having her new car stolen or broken into.

And they know what they want: a three-bedroom, single-family home near us in Monmouth County, N.J. Melissa wants to move closer so our families can spend more time together. Joe lived in the area as a child, and he's eager to return.

But our neck of the woods has seen some of the steepest home-price increases in the nation over the last several years. In the second quarter of 2006, the median price for a single-family home in our region was $393,600, more than double the median of $188,200 in 2000, according to the National Association of Realtors.