[michaelochurch]

New York and Northern California are still extremely high, even relative to incomes. Purchase prices are declining but rents are actually increasing in Manhattan.

My theory is that this is an artifact of the damage done to job markets everywhere else by the recession. The few places where the job market remains strong are seeing rents hold ground or even increase, on account of what is effectively supply destruction of an extremely inelastic good.

[liber8]

Yes, NY and CA are still high, but the "star" locations (as OP calls them) were absolutely hammered during the recession. We've already seen them start to come back from their lows. Anyone who managed to scoop up property in one of these areas is going to see the price of their property double in the next 5 years.

I agree with your theories about rent in these areas.

[ImprovedSilence]

Yeah, DC didn't drop at all, in fact I think it only went up as well...