I think my lack of writing skills is causing some confusion. I know I mentioned comparing SD prices to US prices which infers on an absolute basis. What I meant to say was to compare how the indexes were changing relative to the historical average . The charts are comparing the index, not the absolute value (all cities have a CS HPI of 100 for Jan 2000, if non adjusted for inflation). I agree there will always be a premium to live here but whether or not its changed since 1999, I think the bubble primer on this site does an excellent job of going through that. I didn’t mean to debate that here.
I guess what I’m really wondering about is using the per capita income when determining the price to income ratio. Per capita income is rising significantly faster than CPI. If incomes are rising faster than inflation, then it would justify higher “real” home prices (by real I mean inflation adjusted). Then I wouldn’t expect the real SD HPI to track the historical average.
