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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (57846)	7/17/2006 5:43:07 AM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

You know the deal. Long-term, increases in real estate valuation always match increases in income. In the short-term this is not always the case, but when these two factors diverge, one or both always correct to fall into sync again. During this cycle, San Diego has experienced something like a 2% annual growth in income with a 25%+ annual increase in real estate valuation. Either wages increase dramatically or real estate prices decline sharply. Looking at the comparison of rents to operating costs, will it take more than a 50% decline in condo valuations in the San Diego "Gas lamp District" to bring these two into line? Perhaps so. Ramsey Su may be able to give a more informed answer living in that city. But I'd guess a minimum of a 50% decline in real estate valuation, relative to incomes, in that part of town. .