Half million anywhere, even SD, sounds crazy to me but it is what it is in Vacaville. Commute to the Bay, but only 4 times per month and I drive a CNG car (38 mpg at $2 per gallon).

You make a great point though. I have many neighbors near the home I rent that slug it out 5 days a week on 80. Imagine that must help tip the scales toward walking away as prices continue to slide. I’m comfortable locking into a 30yr commitment because it would make a break even rental at this point. We want to keep our options open so when higher end homes in the Bay area become reasonable we can make the jump.

My concern is that as the market begins its Keynesian death spiral, rent prices may also collapse. I was born with a terrible disorder that deprives me of sleep when I fail to meet contracted obligations. So our fear going into this is the possibility of having to cover a significant rent spread down the road, long term.

I know it is going to get ugly, it’s just how ugly I can’t get a fix on. There are immense downward price pressures in this area that I’m seeing real time. The home I rent was purchased by my landlord, a 20 something 5-year immigrant from down south, on a no-doc neg-am a few years ago. She has been in default for 5 months (banks are backlogged up here) on this and the other 4 mcmansions she bought. During the run up, some creative refis and HELOC’s built her a nice little nest egg she used to buy a couple gated homes south of the border, along with 2 blinged out SUV’s and more Ethan Allen than you can stuff into a 4,000sf box.

Scary thing is there are many like her. Not just in central CA but in numerous burbs across the nation. Even scarier, the balance sheets of our nations largest banks have these investors on the plus side of their balance sheets. If the scenario runs a natural course, we’re likely facing an economic collapse. The question is, will the gubmint save us. If helicopter and his cronies stoke the furnace high enough, we could miss the boat.