An interesting perspective on recent trends in the U.S. housing market is gained by noting how housing prices correspond to per capita income, a traditional measure of affordability. The ratio of housing prices to per capita income is high but close to historical norms in many regional markets. However, notable exceptions do exist. In California, housing prices recently reached levels relative to per capita income far above historical norms. A significant pricing correction has begun in that market. Similarly, housing prices are correcting sharply in Arizona, Florida, and Nevada. Investors need to be mindful of the potential for housing market–related losses and the potential for contagion among asset classes.