If prevailing interest was 7-8% in 2001, with rents being significantly lower than now, the market was overpriced even then. A correctly priced market allows people to buy for a lower monthly payment than renting, with 20% or so down. In my opinion, the Bubble was in the works and housing prices were becoming unrealistic long before 2003.

I for one am ecstatic that prices in SD *are* at 2003 levels, combined with low interest rates. And that distressed inventory on the NJ side of NYC and in the boroughs is quite high at the moment. Again!

I already own two properties that have gained maybe 5-10% in value since I bought them. And I’m planning to buy more, to buy, hold, and rent. As long as rents stay higher than my payment, I truly don’t give a rodent’s gluteus what happens to sale prices. We’re talking about dividend-producing assets here, not speculative ones.

Lastly, low inventory isn’t a sign of a healthy market. It’s a sign that no one wants to sell because they’re underwater, and CA law allows them to squat for quite a long time without paying. A “healthy” market by your definition would have both higher prices and inventory.