A friend of mine lives in a modest area of Sunnyvale. It’s a Mexican American area, and his family has lived there since the 70s, in a tiny, basic, unrenovated 2 BR, 1 BA bungalow that cost about $30,000 at the time. It’s now worth well over $1 million.
So yes, things are way overpriced, way beyond their actual value, and that can’t last forever.
Houses sell, but not as spec properties; and yes, prices will go down - and have to go down - to something realistic. People are moving out of California in droves because they can’t find housing. The same is true in New York City. Depending on an insane real estate market to fund your state or even your personal economy is not really a good plan.
How many Mexicans do you have to stuff into a 2 bedroom house to make the payments on a million dollar loan?