I should have further elaborated before clicking the post button…
They say to bring housing in line with the price/rent ratio, San Diego needs to drop 34%. I would say, they are dead on with that number. My house rents for only $1650, but I paid $345,000 for it, a 34% drop would bring it down to $227,000, and even with 100% financing, that makes the payment much closer to the rent, @ 7% mortgage would be $1324 a month, plus $208 in property taxes, $131 in HOA, makes it almost dead on with the rent I’m collecting right now. On the other hand, they are assuming in this article that interest rates won’t go back up to their original levels back in the 80s and 90s. 😉 If they go back up, the price correction would have to be MUCH higher.
