You are correct, 3-3.5X is the national historical average. However, that average is made up by a few 2X earnings markets like detroit, a few 4.8X earnings markets like San Diego, and and a bunch of 3X earnings markets in the vast majority of flyover country.

You know thats not true right? You know that historically some areas are much higher than that right? Look at my earlier data set on San Diego. Back in 2000 median prices were at 4.82X earnings. Other even more desirable areas like Manhattan were at 16X earnings.

You knew this right???

as I said ” The Masses are Asses”

historically until home prices are 3 to 3.5 x earnings they will correct towards that figure -regardless of location. Last I saw Carlsbad Median home price was 520k ish and what is the annual income?

that is pretty much all you need to know

2- this is a dead cat bounce

3- the masses are asses. See what everyone else is doing and run the other way and you will be correct at least 90% of the time(this holds true in any single thing in life)

4- the beach town -great school areas will fall to 2001 levels- at least.

5- How do I know this ? because I do.

6- finally seeing my REO inventory increase again in vegas. After 2 yrs averaging 45 new assets per month – this year my totals are :
Jan-17
Feb-20
March-13
April-6 (yikes)
May-11 (yikes)
June so far- 26

http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=&geo_id=05000US06073&_geoContext=01000US%7C04000US06%7C05000US06073&_street=&_county=san+diego&_cityTown=san+diego&_state=04000US06&_zip=&_lang=en&_sse=on&ActiveGeoDiv=geoSelect&_useEV=&pctxt=fph&pgsl=050&_submenuId=factsheet_1&ds_name=DEC_2000_SAFF&_ci_nbr=null&qr_name=null&reg=null%3Anull&_keyword=&_industry=

From 1999 to 2007 median incomes grew 30% in san diego county. What was inflation, like 18% or so?

http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=05000US06073&-qr_name=ACS_2007_3YR_G00_DP3YR3&-ds_name=ACS_2007_3YR_G00_&-_lang=en&-_sse=on

Second, if we can agree that coastal property is most desirable, it will go to the highest income bracket.

In SD county, the number of 200K+ households nearly doubled from 29,507 to 57,935. The number of houses on the coast did not double. Thus, the only way to accomodate that shortage is for prices to rise.

To be sure, there has been alot of wealth destruction since 2007, so this may not be as accurate as it was before. Still, unless you are in that top 5.6% of the population in that top income bracket, they will outcompete you for that good based on what they are able to pay.

The only thing “different there” is that when a house drops 20% in value, there goes $600K instead of $100K in a modest neighborhood.

It takes about 15 minutes of effort looking at the MLS to observe that the high end is dead across the county, with the exception of Del Mar. It’s dead. So where are all these multi-millionaire white knights riding in with all-cash bankrolls to scoop up these properties? It’s not happening.

I agree, but I was being generous. Wage inflation has not kept pace with inflation during this decade. Further, wealth destruction in this downturn has disproportionately hurt the wealthy. So again, I ask: why should the price of coastal properties be so much higher than the 1990’s levels on an inflation adjusted basis (using CPI or wage inflation, you choose)?

“Coastal property is a luxury good meaning it is scarce and will go to those who are most willing to pay for it. ”

Why was this luxury good so cheap in the 1990’s (using 2009 dollars) when stock portfolios were healthy, incomes were disproportionatly lower to coastal home prices, and the jobless rate was in the low single digits? The ocean was still there, the sun was still shining, and while I was a lot younger then, I presume beach homes were still considered a “luxury” good.

Am I the only one sick and tired of these faux-arguments.