Reply #36: This is exactly like when the stock market outran earnings growth. [View All]

[Zynx]

The run up in California over the past five years has defied every valuation metric out there just as the stock market defied every valuation metric. People who didn't buy a house two years ago regret it now just as people who didn't get into growth mutual funds in 1998 regretted it in March of 2000. Over time, the long term rate of appreciation in real estate is nothing close to this and the fact that median home prices have so far outstripped median incomes suggests that the housing market, while different from the stock market in a number of key ways, is overvalued. There is no denying that the economics of California do not support $450,000+ median home prices.