The ivory-tower opinion below is blaming speculators for a mini-bubble, but around here I’d say that over 90% of the home sales were regular, organic real estate transactions in 2013.  Prices may fall in the coming months (slightly), and if they do, it will be because buyers are being patient and picking off only the best buys.

http://journal.firsttuesday.us/california-tiered-home-pricing/

Home prices displayed mixed signals in Los Angeles, San Francisco and San Diego in the single month of October 2014. Prices dipped in San Diego, remained roughly level in Los Angeles and rose slightly in San Francisco. Low-tier property prices are still on average 10% higher than one year earlier. Mid-tier and high-tier prices are 6% higher.

As in 2010, today’s price movement is the tail end of a mini-bubble, set into motion some 18 months earlier. This price rise was produced by short-lived speculator interference in 2013 (not a tax stimulus, as in 2009). This pricing activity is under pressure from insufficient personal incomes, rising fixed-rate mortgage (FRM) rates and new construction.

Prices are expected to fall in the coming months, likely bottoming in mid-2016 and retreating toward the mean price trendline. The cooling of speculative fever and continually rising mortgage rates will prolong the falling trend in sales volume, pulling prices down in turn. Remember, real estate prices track and run with bond prices due to interest rate movement. A lag time of up to 12 months exists due to expectations of continued recent price movement — the sticky price phenomenon.

The graph tells the story – the higher-end market is ‘soft’, and only those with precision pricing are selling.