I do agree with the premise that people pay more to live in places like SD; the big question is, how much more?
Most market segments in San Diego County dropped at least 20% during the mid 1990s in response to the spike that preceded it. The current spike is 3 times larger than the 1990 spike. If our academics had projected the 1950-2000 trend of 2.6% average annual increases from 2000 to present, the 3bd/2ba house in Carlsbad that sold in 02/2000 for $375,000 would now be selling for $448,000 instead of $700,000+.
That’s one of Piggington’s primary points – that long term trend does hold up. In order for the $700,000 price to correct back down to the 1950-2000 trendline these academics are using, it has to decrease another 35% on top of the 10% that’s already occurred. That’s assuming it doesn’t overshoot, which is what’s happened every other time these markets have distorted like this.
Their own statistics don’t even uphold the premise that this time it’s different.
