From the San Diego U-T yesterday, home prices have hit a five-year high in San Diego. Brokers in the multiple offer trenches are "enjoying" the insanity first-hand. Perhaps better than the article itself, was this reader comment:
Things are getting a bit frothy, but this isn't a bubble yet. There are a few things that I look at when I say that. In the areas where I look, you can buy a house and the mortgage payment is basically the same as rent. Of course there is still a down payment, property taxes and maintenance, but if a mortgage payment and rent are the same, prices are reasonable. Also, it seems that people are actually putting money down and buying within their means. No matter how you do the math, if someone can afford to buy something and chooses to pay that price, then that is the fair price. This is different from the bubble when people couldn't actually afford to buy at the prices they were paying. If (when) mortgage rates rise prices might drop since a house is more about affording the payment than the actual price. However, when that happens we are supposed to be down to 6.5% unemployment so demand should increase. Hopefully prices don't shoot up too quickly, and the Case-Schiller index is a better tool than this one that follows the mean, but for now we are just fine.