Prevailing Wisdom:"Settle" With Price "Disconnect"
This Forbes piece is a case study in bubble psychology. "Welcome to an era of million-dollar bungalows, garden apartments and two-bedroom condos (in need of renovation)."
"The problem is that in certain markets, there seems to be a complete disconnect between property value and the buying power of a dollar. "'In California, a million-dollar home is no longer a big deal,' says John Burns in Irvine, Calif. 'In places like Palo Alto, that'll buy you a simple 2,000-square-foot home that's 40 years old. It's pretty crazy.'" Notice how often you hear 'crazy' associated with home prices these days?
The pro's are passing along the kool aid. "The assistant to a man from London telephoned Corcoran broker Diane Saatchi in the Hamptons, to say that the man was looking to spend $3 million on a house. 'What month do you want?' joked Saatchi, who is currently listing a summer rental that comes close to $1 million."
"These days, a lot of it comes down to lowering your expectations of what a million can buy. 'I think a lot of people are settling,' says Neil Garfinkel. 'Whereas eight to ten years ago, they didn't have to settle.'"