Rich,
Let me begin by saying I have firmly been bearish on RE prices since late 2003. While there is no hard data this is what I have see anecdotally.
Demographic Change
Lots of high income people moving to the area who work from home and/or renting office suites. This wont show up in any booming new business or local hiring. Older long time retirees with most of their assets in their homes cashing out and moving to cheaper locales. Wealthier retirees with substantial assets replacing them. Net effect is retiree population stays flat while the composition changes.
Changes to SD
Rich, you really need to get out more. I just spent a nite at the Westin Horton Plaza to get away from the kiddies for a night and was astounded at how the city has changed. The very cosmopolitan city I found was a far cry from the ghost town I caroused during pub crawls in the mid-90’s before getting hitched. Drive around Carlsbad/Encinitas where I moved in 1997 and It is unrecognizable today. Good Restaurants back then were Taco Shops and a good dinner required a drive south to Del Mar or Downtown. Not any more! I grew up back east and SD might have well been on Mars when i told my friends I was moving out here in 1992. Now every one in the USA know what SD is about!
Not that this justifies the price spikes we’ve seen but they certainly are a major factor in rising prices and shouldnt be discounted. As you know, RE is sold on the margin and while every house on my street couldnt sell for close to a $1M, one or two a year can. For the record, I think prices will return to 2003 levels and then settle there for a few years.
