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Shall we Wollongong? Anyone? If you thought Wollongong was a verb, I don’t blame you. The only reason I know it’s a noun is because I have family who live there and I happened to visit this beautiful seaside town about 50 miles south of Sydney in the fall of 2008. According to the ever-reliable Wiki, the “Gong,” as locals call it, boasts a population of about 292,000, not much bigger than my current hometown of Fremont. Besides its beautiful beach, I do remember that it had the magnificent Nan Tien Buddhist temple and is home to the University of Wollongong, rated “Australian University of the Year” in 1999 and 2000 by the Good Universities Guide.  The Gong, as I remember it, was a nice, friendly, but not too exciting sleepy town at the edge of the world.

Imagine, then, my surprise when the Gong recently made headlines in no less than The Wall Street Journal (4/28/15). At least by one measure, the Gong is now more expensive than New York. When I last checked, New York had a thing or two more going for it than the Gong. Apparently, it takes about 7.5 times your annual income to buy a house in the Gong, compared to a multiple of only 6.1 in New York. Before you go rushing to buy that “cheaper” condo in Manhattan though, the Journal once again comes to our rescue (“Where Prices Are High and Air Is Thin, WSJ, 5/13/15). The 66-story 220 Central Park South has listed more than 60 apartments above $20 million, compared to 2008 when “only” 29 condos sold at those levels. At the 1004-foot green glass tower One57, the penthouse fetched $100 million in January, the most expensive sale for a single unit ever.

Are we in a housing bubble? For those readers who live in Silicon Valley and certain pricey markets around the world, it must certainly seem so. The wife, who likes to check out neighborhood kitchen upgrades at open houses, unsuspectingly ventured into one a couple of weekends ago and almost got stampeded by the flood of prospective buyers. After only one weekend of showing, the agent proudly put up a ‘Sold’ sign. Rumor has it that newly affluent overseas buyers roam the streets of the Valley with sackfuls of cash in their black Mercedes Benzes, ready to snap-up two-room shacks in Cupertino, Palo Alto, Los Altos and everywhere else.

According to the Zillow Home Value Index (ZHVI), the metros of San Francisco and San Jose (which comprise the 20 largest cities in each metro) have both exceed their pre-crisis highs. And so it is with Honolulu. In the Los Angeles, Charlotte, and Boston metros, prices are within 5% of their pre-crisis peaks. Where are the bargains? In Tucson (-30% from its peak), Las Vegas (-38.7%), and Atlanta (-11.2%), it appears that the property market hasn’t reached boiling level yet. Nationally, the numbers look slightly more sobering. As of January 2015, the S&P/Case-Shiller 20-City Composite Index stood at 172.81 compared to its peak of over 200 in 2006. The National Association of Realtors Home Affordability Index tells a similar story. Barring a few metros in California, New York, and Hawaii, a family at the median income level can still afford to buy an average home.

What should you do? If you own a home, pat yourself on the back. You’ve done rather well in the last three years even if it is only on paper. You feel good and spend more on other things (which helps the economy). If you are really lucky, you actually have an economic reason to move to the boonies where you can trade your home for a mansion with some left over in the bank. But what if you are a prospective homebuyer? Make sure that you fully understand the costs of home ownership (and there are plenty). Interest rates are low and hopefully your income is high enough. The local economy influences home prices to a large extent, so make sure that your area has plenty of jobs and a potentially bright economic future. Factor in other considerations as they apply to your own situation, such as schools, healthcare, crime, quality of life. As the old adage goes, it’s all about location, location, location.

Despite the periodic busts of the housing market, some markets like New York and the Valley continue to show an upward trajectory over the long term.  According to Draft Plan Bay Area—Strategy for a Sustainable Region published by the Association of Bay Area Governments (March 2013), the San Francisco Bay Area population is expected to increase by 30% from 2010 to 2040, with 33% more jobs and only 24% more housing units during that period.  If these projections hold up, the local housing market should remain strong in the long run.

As for me, I am waiting for that cash buyer to ring my doorbell.  For the right price I might even thrown in my six-and-a-half cylinder 1929 Bentley Speed Six with the overhead camshaft, single-piece engine (the miniature model).  And then I will pack my bags and head out.  Tucson anyone?

Prabhu Palani, CFA, was formerly a managing director and the head equity strategist at Mellon Capital Management in San Francisco, CA.  Previously he was senior vice president and portfolio manager at Franklin Templeton Investments and Principal, Portfolio Manager at Barclays Global Investors.  Prabhu holds graduate degrees from Stanford University and the University of Delaware and is a member of the CFA Institute and the Institute of Chartered Accountants of India.