I find it ironic that some are arguing over the real estate market for the 1 or 2 percent of the population with the idea that these are the super rich. If one looks at the Wells Fargo Opportunity Index (tracks the percent whom can afford the median), it averages around 30-40 percent for San Deigo, and dropped as low as 18 percent in the early 90’s. In LA it dropped into the low teens over the same period, but averages just a bit higher. Right now SD is around 5 percent, while LA has dropped to a touch over 2 percent!
So to the bottom 95-98 percenters, unless you already have a pile of cash, a generous relative or some real estate already in your pocket, you cannot afford the median.
Add in the Global Insights analysis, which takes into account historical prices (and hence the sunshine tax), population, jobs, and salaries, it is very hard to take any claims of RE ascendancy with any seriousness.
BTW: That report puts the area at nearly 50 percent over valued–and the same report actually had the area undervalued as late as 2001!
It has been said before, but this sounds more like the tech bubble than a prior RE bubble. Of course it will take longer to play out. RE is opaque, while stocks are transparent and it still took a couple of years for the tech bubble to renormalize.
Nobody ever knows for certain what will happen in any free market, but the mathematical expected value of RE is decidedly negative.
