(See recent posts on Phoenix Case-Shiller Home Price Index.)

… on the other hand his counterpart, Robert Shiller of Case-Shiller fame, does not see the real estate market near bottom.

Wellesley College economist Karl Case, the “Case” in the widely followed S&P/Case-Shiller index of U.S. housing prices, says he thinks that the housing market may be near a bottom. If he is right, financial firms may be able to breathe a sigh of relief.

At its most recent reading for June, the Case-Shiller index was 19% below its July 2006 peak, and many analysts say the decline is far from over. The inventory of unsold homes on the market is still very high, they point out, and until that excess is absorbed, it is a buyers’ market. Moreover, financial firms, hobbled by mortgage debt gone bad, are trying to rebuild cash reserves, making the firms less willing to extend loans to would-be buyers.

And the combined effects of the housing and credit crises have damaged the balance sheets and credit-worthiness of many households, leaving them a high hurdle to buying a new home. Yale University professor Robert Shiller, the co-creator of the Case/Shiller index, is among those who think it will be some time before prices stabilize.

But in a paper presented before the Brookings Institution in Washington yesterday, Mr. Case argues there is cause for optimism. He notes that of the 20 metropolitan areas covered by the Case/Shiller index, nine have shown prices slightly improving in recent months. He also says that the relationship between incomes and home prices has neared a level seen at the end of past housing slumps.

That last sentence is particularly intriguing.

“He also says that the relationship between incomes and home prices has neared a level seen at the end of past housing slumps.”

That means to me, if true, that when home prices do indeed bottom out that home prices may return more quickly than I expected to “normal” appreciation and that it’s less likely that home prices will troll along the bottom for a few years after bottoming out.

That is, we may see home prices move more like a “V” instead of an “L” after home prices bottom out.