“Perhaps it was the dollar that lost half its value and not that my house doubled…!”
– I think this is precisely what happened and I have lived on both coasts. I sold very early in 2004 and missed A LOT of the price gains in North County. I rented for a few months and could not stand it so I got a deal on my dream house in Chapel Hill, NC and have scarcely looked back except to check on the status of the market occasionally (a lot of my family live in SD).
I am one of the folks that would likely move back if the market crashed but have hedged with a house elsewhere so I’m not hurting bad if it doesn’t.
I can’t predict what is going to happen anymore than the next guy but I can say this. Bears are fond of saying that the market doesn’t care what you payed for your house or what you spent fixing it up. That is true but it works both ways. The market also doesn’t care if you can personally afford the house you want even though you could have afforded it 5 years ago. We live in a global world. Demand for homes in San Diego (especially on the coast)
is not just from SD wage earners.
“As a result, only what is really limited (real estate, gold, oil, etc.) increases in price, but not consumer goods because there’s a nearly infinite supply of low-wage labor.”
– Watch out for food. Corn has doubled in price in a few months due to the higher anticipated demand for ethanol. Chicken farmers are moaning and groaning. Cheap labor only goes so far with food you need land. The supply of farmland is decreasing in this country. We likely can’t import corn for $2 a bushel. The price of food is going up.
