I agree with the psychology thing. I’m been looking at houses on ZipRealty for a while and I’ve been desensitized to what “real value” is. I now tend to spot “relative value,” that is value relative to other listings.

Then one my friends relocated to Indianapolis. So I looked at real estate there just for the heck of it. Well, in Indianapolis (a big foreclosure market) you can get houses for less then $100/sf, even in the toniest neighborhoods. That’s what brought me back to reality of how way, way, way overpriced San Diego is.