I agree. We’re not comparing apples to apples here. We have just went through possibly the biggest credit bubble this country has ever seen. It’s starting to fizzle more and more. There are an enormous amount of ARMs resetting in the next few months. Many of these homeowners are scrambling to refi and appraisals are coming back well short. The no money down buyers are getting creamed right now. This enormous credit bubble has created several by-products. The largest being the housing bubble. The ’90s didn’t have the run up in values like we had the last few years. Many homes have appreciated over 300%. How is this a fundamental factor? Many homes in La Jolla on Soledad were selling between $300k – $500k just a few years ago. They are now selling for $1MM+. Typically, when an asset class deviates far out of it’s standard rate of return it eventually overcorrects before arriving back to it’s mean rate of return. I am a firm believer that prices will drop by a large margin over the next few years.
