[jluetjen]

Geez. While property out here on the east coast is hardly "bargain", looking at Wayne's numbers it's pretty clear how how property values have distorted the market and economy of urban California. I suspect that there's more to the story, and a number of factors which "prop-up" housing prices in a downturn. Whenever I talk to coworkers in CA, I always hear how nobody can afford to buy because prices are so high. But yet prices don't fall! So there are a lot of people holding on to high priced real estate because it's not worth the price that they're asking, and so nobody will buy it.

It reminds me a little bit of being the reverse situation to some of the cities on the east coast which have "rent control", such as Boston and NY. In that case there were a large number of appartments which had artificially constrained low prices -- the result of which they NEVER -- EVER went on the market. So the appartments were cheap, but not available. In CA, the real estate values are high, but no buyers. Both are examples (I believe) of economic distortions cause by artificial controls on the market. In the case of CA, I just don't know what those controls might be.

Either way, both are examples of inefficiencies introduced into a market by artificial controls.