Very interesting. I enjoyed Bernstein’s book several years ago. Highly recommended. So, the takeaway is that fundamental shifts in price relationships are possible. Extraordinarily rare, and only due to a massive shift in underlying economics. In this case the average inflation rate increasing twenty-fold! As was written, the “noise” of WWII hid the disequilibrium shift. So, two questions:
1) Is the war on terror, or any other current events loud enough to hide any such current disequilibrium shift.
2) If such a disequilibrium shift is taking place, what COULD it be?
You mention the possibility that the strategic importance of living in San Diego may have changed, but we clearly see bubble like price increases in many major cities around the world. What sort of disequilibrium shift could have fundamentally changed the valuation of real estate globally? I can think of none. But I would thoroughly enjoy a discussion on this idea.
