Assuming that interest rates remain at current levels (probably not a good assumption), I do not see the nice parts of these areas dropping to 12x annual rental income. People will buy in the nice areas at well before they become cheaper to own than rent. (Same is not true for the marginal areas). I would expect more like 14 or 15x at current interest rates. That’s about the point where the marginal cost to own vs rent is relatively small.
HOWEVER, if interest rates creep up to the 8% + range, I would fully expect to see houses in Point Loma sell for 12x rent or lower.
