Home prices rebounded fairly well from the first big flood, with prices rising in the year+ between the first one and the second one, even on the flooded homes.

The worst is if your area never bounces back or is the slowest to bounce back after the economy rebounds, you are not guaranteed of that spring effect that will normalize things as quickly as you had hoped.

Because you can get really screwed for years to come and cant rebound from that any time soon

Like you've stated, the market has rebounded above that of the the 2008 housing market crash, which is an understandable concern.

Also given the age of our condo, we haven't had any capEx expense, so basically we've had a tenant pay down our mortgage, and since then the market has rebounded and we are now sitting on a nice chunk of equity.  

The first couple of years were ok, and we were banking on a rebound and good appreciation (mistake #2).  

Right now, I can hit the 2% rule or close to it in solid Class C neighborhoods, but the houses are unlikely to appreciate and may even depreciate (although as the market has rebounded, the values in this area have started increasing so that is promising).  

If you are a flipper, or believe your SFR market is depressed, and has reason to believe it will rebound where you will have capital appreciation, then the cash flow matters less.  

I saw rent rates rebound (and go far higher much quicker) than the data below shows, so I don't know what to believe here in general:Real Gross Rent History for San DiegoDateUSMedianCaliforniaMedianSan Diego, CAMedianSan Diego, CAAverage2013$905$1,224$1,289$1,3682012$897$1,218$1,272$1,3512011$900$1,213$1,278$1,3372010$910$1,238$1,329$1,3952009$909$1,247$1,321$1,3912008$914$1,260$1,339$1,4032007$875$1,196$1,296$1,3542006$881$1,189$1,306$1,3602005$862$1,152$1,269$1,328 (http://www.deptofnumbers.com/rent/california/san-d...)

People made a killing during the last bubble because they saw the market tank and new it would rebound.