Live from the Ferry Building: Is the San Francisco Housing Market Efficient? (2006): "Under the direction of: Professor Jonathan Levin...**:
...With prices skyrocketing for housing, especially in the San Francisco Bay Area, there is much talk about a housing bubble. However, the rapid price increases could also be due to changes in fundamentals: implicit rents, interest rates, and property and income tax rates. I use sales and implicit rental data from 1983 to 2005 for the City of San Francisco that is available through national accounting databases to examine the relationship between housing prices and fundamental factors. I find that the housing market is marked with inefficiencies in the short-run but is ultimately efficient in long-run. The short-run inefficiencies are most likely due to the high prevalence of transaction costs in the market.