I have friends and family in Cali and they all agree it's a one way street there now. Nobody from outside the state can afford to buy a house there, and the massive appreciation homeowners have seen only helps them if they move out of state! My sister's house has doubled in value but she still can't afford a bigger house because they've gone up just as much! I have literally been priced out of considering a move back there, which is too bad.
The worst part is that in order to afford housing in Cali, desperate people are getting these interest only and adjustable rate mortgages to get a smaller payment. When the interest rates go up they will all get hammered and many of them will lose their houses. It's no surprise that almost a million more people left Cali last year than moved into it.