* Rent on any particular home should be 1/100th to 1/120th of the total value (i.e. - $1500/month rent = $150,000-$180,000 home). That’s how the RE investors run the numbers.

* The medium home should be 2-4 times the medium family income of the area (North Highlands=2x, Granite Bay/Fab40’s=4x, *maybe* a lil more). So with Rocklin’s medium family income of approx $75,000 (est. from 2005 numbers + CPI), the medium house (think 3 beds, 2 baths, 1,700 sqft-ish) should be $225,000, $270,000 tops.

SacTown has a ways to fall yet. Want to get a “rule of thumb” number for a house? Check its comps from 2000-2002 (just as the latest price run-up built up steam). My own home shopping has focused on Rocklin, and my guess is that $130/sqft is a good rule of thumb to work with. Anything over that price will be worth less then you paid for it in 2010 (if not in dollar terms, then in real terms). And even at $130/sqft I’m of the opinion that you’ll be risking at least 10% if you buy in 2008-9. There has already been a bank owned property (ML# 70077271, search for it on http://metrolistmls.com/ ) that has gone pending on a 4 bed/ 3 bath / 1951sqft for less then $134/sqft and we aren’t even in 2008 yet!!

Look into what is happening already with Florida condos; some have been bid on (purchased?) at 50% of peak prices. Then look into the Japanese RE bust from early/mid-1990’s thru til now. That’s what is coming!

As is human nature, when the balance swings too far to one extreme, it invariably swings back past “normal” into the other extreme. If you time it perfectly, you could very well get a screaming bargain. But if you’re just looking for your home til retirement (as I am) then buy based on the fundamentals mentioned above and here ( http://drhousingbubble.blogspot.com/2007/08/3-methods-of-real-estate-valuation-for.html ) and you’ll have a hard time going too wrong.

Best of luck to all!

Campbeln

PS – Calculated Risk, Mish, Winter (Economic & Market) Watch, Sudden Debt, Maxed Out Mama, Patrick.net and Dr Housing Bubble are your friends! Visit them every day!