The old hood, Silverlake

The neighborhood in LA that we used to live in is called Silverlake. Silverlake is a hip, gentrifying area along Hollywood boulevard between Hollywood and downtown. It was the about at the epicenter of the LA housing bubble. I was looking on Zillow.com today to see how real estate is doing. Well here is an example

811 Silver Lake Blvd
1228 square feet
3 beds, 3 baths



Since 2000, it has been sold seven different times!

Here is the sales history
--------------------
11/24/2008 $304,500
11/27/2007 $602,295
11/15/2006 $704,000
08/05/2005 $650,000
10/01/2002 $321,000
04/09/2002 $258,306
12/21/2000 $262,500

Here is a chart so you can appreciate the trajectory better.



The house price appreciation from start to finish is exactly 2% per year.

Now my wife and I rented a place about the same size in the same neighborhood for $1200/month. When this place sold for $704K in 2006, it would have had a monthly mortgage payment of about $4200/month. What were people thinking!?