Steve thanks for posting. We don’t get a lot of thoughtful contrarian opinions here so it’s good of you to keep us on our toes. Regarding your thoughts:

– Median prices are a lagging indicator, and as powayseller mentioned above there are other indices that are probably better. Also, is 2200 “a lot?” You didn’t provide any historical context for those numbers. Even if so, don’t you think that a 24% drop in sales says something about where prices might be going?

– Check out http://bubbletracking.blogspot.com/2006/07/tracking-san-diego-county.html inventory seems to be going up at about 1000 – 1500 per month and has been since the start of the year. So far in July we are up about 450. A little slower but not much.

– Of course not all condo prices have fallen. I don’t think anyone has been foolish enough to claim that, or to claim that there are none that have gone up. Even in a down market surely there are many properties that go up due to other factors (gentrification of a particular neighboorhood as an example). What we are interested in is where the market as a whole is going.

– You’re right that until recently foreclosure rates were abnormally low and the current rates are not so bad historically speaking. The question is why were they so low before? The simplest answer is that rising prices allowed people to avoid foreclosure by selling at a good profit. So while the end to these abnormally low rates isn’t direct evidence that prices will fall, it is direct evidence that prices aren’t rising much anymore.