I am not sure 40% drop is possible, because the calculation of rent vs buy can only support 10-20% drop, if rent is supposed to be equal to the holding cost of same property (interest, property tax, hoa). While historically the holding cost is bigger than rent in california.
I bet investors or speculators will start to jump back to the market with another 10% drop of RE price, which is the best way to offset the inflation, if inflation is under way. The SD market has been heavily influenced by investment and speculation activities unfortunately. This was a special market and will always be.
