To me it indicates much more than that: high taxes, high regulatory fees, high cost of labor. The median cost per square foot for a home in California is $319 dollars, the median cost per square foot for the entire U.S is $151. The median home price in California is $379,000, and the U.S. is $225,000. One only needs to do a simple web search to see the current migration from California's tech centers to other tech destinations such as Austin, for example (note in my previous comment I said more people will leave, people are already leaving)

>If you drive people away, more will replace them

There is no data to support this hypothesis, however, in this case. The facts are California housing is expensive, and there are not enough jobs at those wages to support the expensive houses.

Prices can't exist without people willing to pay them. It doesn't matter how high your taxes, fees, and labor costs are, if people aren't willing to pay, prices don't stay high.

Another way of interpreting "The median home price is California is $379,000" is "people are willing to pay, on average, $379,000 for a home in California."

The home prices are the data to support my hypothesis. If there wasn't demand for houses then prices would fall. Demand for houses means people want to move there. If there were a net migration out of the state, prices would be dropping.

> The home prices are the data to support my hypothesis. If there wasn't demand for houses then prices would fall. Demand for houses means people want to move there. If there were a net migration out of the state, prices would be dropping.

This is true in general, but it isn't as immediate as you are making it out to be and doesn't give you any insight into how long it takes for the price to correct itself. The migration trends are 1-2 years old at this point. If my hypothesis is correct, expect to see your pricing drops soon (towards the middle to end of next big moving season, typically May 15 to August 31st), but only to a certain level and then it will make more sense for the builder to go under and let the banks take the hit.

Several major tech companies just announced moves into Downtown LA...Almost every new apartment building built in downtown has reached 90% occupancy within 6 months. A few of them reached 95%+ occupancy within their first month. For about 2 months earlier this year, the available inventory of new condos (as in, sold by the developer) reached zero and even the supply of condos on the market dropped into the lower double digits.

California is experiencing a net outward migration of people, but from the parts of California where there are already too many people, so all those people leaving has had minimal effect on the price of housing in LA or SF.

We have a disbeliever in the efficient market hypothesis! I generally am in the same boat but have yet to turn this into significant profit.