California homes “overvalued by 40%”

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News item from Bloomberg: ‘California homes are overvalued by as much as 40 percent and stricter lending standards will probably contribute to ‘material’ price declines, according to analysts at Goldman Sachs.’

More: ‘In August, the median price for houses in California was $589,000, though economic conditions only support prices of $350,000 to $380,000, the analysts said. The average U.S. home is 13 percent to 14 percent overvalued, the report estimated.’

Our take: Not to split hairs, but we don’t read this as a prediction of a 40% decline.

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Hat tip: Cal