I’m not really familiar with the San Diego market, I live on the coast of Long Beach and work in commercial construction. I’m sure there is lots of similarity between the two markets, so my observations may make sense. Including the 1999 – 2004 acceleration of home appreciations the median home value in California gained 339% between 1980 and 2004. This is slightly under 7% per year. If I substitute the unprecedented recent gains with the acceptable 7%, the median home price in Long Beach should be around $292,000 by mid 2007. (The median price was $485,500 in May 2006 after a 6.3% drop from April.) If we see a moderate average drop of 3% per month, the long Beach median home price will meet with the $292.000 acceptable median by the end of next year. It can happen without crash landing, without creating a major recession with high unemployment and many other negative consequences.
