[jyl]

The $1MM bungalow - or rather, $1.5MM in some parts of the Bay Area - is undoubtedly a major part of the retirement savings for many Californians.

But why should those houses revert to national average pricing, even if the tech bubble does collapse? When the tech bubble collapsed in 2000, core Bay Area house prices only declined about -15%. In the Great Recession, ditto. (Core means what we actually think of as the SF Bay Area, so excluding distant inland communities like Livermore etc.)

Does the rest of their retirement portfolio have downside risk of only -15% or so, in the event of a very major market / economic crash? I doubt it.