[washingtonismoney]

7. That brings me back to a point I made earlier: the market is telling us that people want to live in California. Overall, people value living in California more than they value living just about anywhere else. The housing prices in California could not be so high unless people were willing to pay them. The market is telling us where people want to live.

But terry, that's only a first-move economic analysis. In the ideal market, when the price rises, supply commensurately rises to meet demand -- which drives the price back down to the old level. That's not happening in California. Housing isn't the ideal market for a number of reasons: space, for one. But the other is regulatory. Towns like Mountain View and Redwood City don't have to have as much sprawl as they do; regulations keep them that way.

[washingtonismoney]

7. That brings me back to a point I made earlier: the market is telling us that people want to live in California. Overall, people value living in California more than they value living just about anywhere else. The housing prices in California could not be so high unless people were willing to pay them. The market is telling us where people want to live.

But terry, that's only a first-move economic analysis. In the ideal market, when the price rises, supply commensurately rises to meet demand -- which drives the price back down to the old level. That's not happening in California. Housing isn't the ideal market for a number of reasons: space, for one. But the other is regulatory. Towns like Mountain View and Redwood City don't have to have as much sprawl as they do; regulations keep them that way.