[quote=esmith]-Prices have dropped a lot (25% off peak in late 2005)

Not in La Jolla.

assuming 7-9% real inflation

Did you really see 12 years of 7-9% wage inflation?

[/quote]

in 2005 an entry house in La Jolla was 1.6, now it is 1.2 (close to many bland boxes in CV).

And yes, the population looking for homes in La Jolla today easily has an income 200-300% the level of those looking back in 1996. Engineers in 1996 made what….maybe 70K. Today 150K is typical. I’m not saying those people working at walmart have had great wage increases but the educated class that has not yet been outsourced has done just fine. Walmart workers aren’t shopping for homes in LJ so wage pressures at the low end and ‘average wage growth’ does not matter.

Also, today it is almost universal that the educated buyer is married to a another high-earner (150+150=300 ==> 1M mortgage + 20% down ==> rational sustainable entry-level price of 1.2). That was not as much the case in 1996.
Of course if the man earns 400K+ he can still easily afford a stay-at-home trophy wife and the LJ house. That part was true even in 1996.