After catching up on this thread WAY too late, I am going to throw my two cents into the discussion.
I think alot of the dislocation between ‘reasonability’ and ‘reality’ that is driving the OP out of SD is the way people, especially new buyer/households, shop for housing. Lets face it, new buyers make the market. The whole bubble was driven by falling interest rates and mortgage standards. The bust came when we ran out of willing bodies to take, and then pay for mortages. But new buyers are also some of the dumbest buyers around. Not always, but often. They get a first promotion, get engaged/married, graduate grad school, get pregnant, whatever; and then decide they need to buy a house. So the go out, look around alittle bit and then try to make the best buy they can. But there is no historical or economic relevance to this decision process, and a tremendous amount of emotional baggage. Coupled with a selfish and delusional RE industry that actually believes high prices are good, and a even more selfish and delusional Governemnt which constantly enables the industry to engage in this delusion, we get todays reality. Prices are high becuase they ‘always are’ and people dont want to spend the time or energy to figure out they are being gamed. This reality could be changed, but that would require a change in economic education, rational thinking, and fiscal policy. Good luck with that, there are too many stakeholders who stand to loose too much for any of that to happen.
