Having worked in the residential development business I thought I would comment on the sometimes conflicting news stories we get these days on the state of the housing market.
Basically, the housing "recovery" we're reading about does not mean that the housing market is returning to its pre-recession normal. Instead, a significant part of what we're seeing in the housing market today is the release of demand that was pent up during the Great Recession. This is not unusual, and it is typically interpreted as meaning that the housing market is starting to recover. However, things may be different this time around because of another factor that has not gotten nearly as much news coverage.
That other factor is that we have run out of financial band-aids to compensate for real household incomes that have been stagnant for the past 40 years or so. Bringing more wives into the workplace, working longer hours and increasing household purchasing power with easy debt all propped up incomes for the past few decades and allowed the middle class to buy homes and other things which kept the housing industry and the larger economy growing. But those band-aids are all used up and we don't have any others on the horizon.
In summary, there are some fundamental realities that need to be addressed before our housing market can return to the old normal.