Californians have always paid more than that elsewhere in the country. We are used to paying 50% of our incomes to own our dream house. That is part of the reason California real estate is traditionally more expensive. But the bubble is not a California issue, but a national one. The Federal Reserve injected a lot of liquidity and credit into a system that had been stable for 30 years. The bubble has been since September 11, 2001 and is a Fed bubble that caused a real estate bubble on purpose.

The mean is not an issue of changing history, but explaining where we would be if the FED had not given away money to stop the effects of Sept 11 on the national economy. Prices doubled since 2001 because rates dropped in half. Rates are now returning to the “mean” and expect that prices will too. The same general area they were in 2001 before the shock to the system.