Steve, thanks for your reply. You can’t compare the price of San Diego homes to the price of Cedar Rapids homes. (Sunshine tax refers to the higher cost of living here.)

What is the historical price/income ratio for the other cities you mentioned? I would guess that price/income is 2.5 – 3 for Cedar Rapids, 3.5 or 4 for Kansas City. It is usually between 7 and 9 in San Diego. You pay more for the privilege of living in a desireable city.

San Diego’s supply glut could take a decade to consolidate. With the overbuilding, people moving out, and rising foreclosures, it could be many years before the current supply is bought up. Buyer fear, a reverse psychology of the buyer mania of the last 6 years, can make the downturn even worse than any of us expect.

My prediction is San Diego median price is $308,000 by 2011. So it is well above your $300K minimum. What if foreclosures are really high, buyer psychology against buying is stronger than expected, and we get below $300K? Possible? I don’t know.

Have you read the Bubble Primer articles? A lot of people have not read it, but it is well worth the time.