[quote=SD Realtor]I do agree with your point rich that low rates don’t justify insane valuations. However those who are locked into those low rates from purchases made in the past 10 years (IMO) will be able to weather any storm caused by depreciation. [/quote]I don’t think anyone is saying that low interest rate justify insane valuations. However, when P+I is equal or less than comparable rent, would you consider that insane valuation? Especially if you buy with a 30 years fixed? I’m sure if you bought in early 70s and see price tripled by early 80s, you’d think that’s insane as well. All the while, interest rates were rising as well. But yet, price never came back to yearly 70s price. So, just because valuation increased does not make it insane. Especially if rent and income rises as well.
Today is a very unique situation. Valuation is at the high point compare to recent history. However, it’s also at a low point when compare to income and rent. So, I contend that since majority in CA buy with a mortgage, monthly payment is more important than valuation. I viewed P+I vs rent as a much more important barometer for bubble than valuation.
