The most obvious sign of a bubble in California is the affordability issue. The CAR web site has a breakdown of who can't afford what. "California households, with a median household income of $53,540, are $60,380 short of the $113,920 qualifying income needed to purchase a median-priced home at $488,600 in California, according to the California Association of Realtors."
That's $60,000 each and every year! "The San Francisco Bay Area had the highest gap in the state at $92,930, where potential homebuyers had a median household income of $67,770 but needed qualifying income of $160,700 to purchase a median-priced home at $689,240."
Here is CAR's annual income shortfall by area. Note the state average is about the same as southern Cal.
California - Condos ($36,990)
Central Valley ($32,660)
S. Francisco Bay Area ($92,930)
Southern California ($59,320)