A very gross measure would be a combination of 3 factors for that particular area: tracking inflation, return to historic rent/price and price/household income. You’ll have to pay Dataquick $250 for the price data. Those 3 methods will give you an idea of the true fundamental value. As vrudny said, it’s probably going to take 5-7 years for prices to return to fundamental values. The reason it takes so long is because the resale market is very sticky on the way down. It usually takes a year longer for prices to go down, than for the bubble to go up. Are you hoping to buy at the bottom, or maybe you are happy with a 30% discount and don’t mind if prices continue falling for 2 years? I expect San Diego to keep losing 50,000 people/year and unemployment to rise to over 8%.
