Profhoff asks how high can prices go? That is the question! Just like expensive areas of NCCSD prices in La Jolla have risen insanely fast in the last year. In La Jolla we are well above peak bubble pricing at this point, and if you believe Zillow many houses are close to double peak pricing.
You can claim this is due to low inventory, but in the $1,500,000 and up price range there is actually a good bit of inventory. (look at inventory in 92067 Rancho Santa Fe!)
You can also make the claim that these prices are justified due to high rents and low interest rates, but most buyers of two million dollar properties are not even thinking of renting and they are most likely paying cash.
You can also argue that we aren’t building enough low cost housing, which is probably true, but we are building a good bit of high end housing. So while that seems like a good argument for why low end prices are rising it is much less convincing for high end.
I’d hate to make predictions of a bubble, because a bubble implies a price drop in the near future and given the data Rich has been posting that seems unlikely. But in expensive areas, we’ve had steady price increases of around 10% a year for 5-6 years, while neither the economy nor inflation has kept pace anywhere close to that.
Which brings us back to the OP’s question, how high can prices go? I have no idea what the answer to that is, nor do I have any predictions of how this plays out, but it does seem to me price increases in high end areas can not continue at their current pace forever.
