Questions from a frustrated buyer

My posting this morning on Craigslist:

I want to buy a modest but liveable house west of the freeway. Why is everybody still asking bubble prices? There are dozens if not hundreds of houses asking a million or more. Very few of them sold at those prices all year, and they certainly aren't going to sell now with the quadruple-whammy of a severe recession, Schwarzenegger's budget disaster, the stock market meltdown, and the rediscovery of lending standards.

People are still holding out for peak 2005 prices in this area while everywhere else in the county they are at 2003 heading to 2002.

The median household income in Encinitas is around $80,000 (before the recession kicks in). Do all these sellers really believe that every house out there is worth 12x to 15x the median income?

Who do they expect to buy these places? Exactly who has a $200,000 cash down payment and can qualify for a $800,000 loan? Don't most of the people who fit that criteria already have a house (or two)? Who is the marginal buyer here?

And the price-to-rent ratio is still ridiculous. Why would somebody pay $7000 a month in mortgage and property taxes for an average house when they can rent a nicer place for $3500 a month?

If you've got a cute little place west of the 5 and you're willing to sell for 2003 prices, please contact me. Condos need not apply.