I agree with JWM, no V shape recovery and definitely not 2008. The argument is somewhat subjective. I’m sure people will grow tired of renting and take steps into home ownership, the 4th quarter of 2008 looks promising because the market will begin to reflect the full effects of the credit crunch. I guess the real question is when is it safe? My own personal objectives are just to not over pay and get hit with 150 to 200k hit on my equity and find myself in a situation where I have to sell. Here is my thinking right now…How bad of an economic downturn are we talking here??…..Thats first and foremost…in other words I will not buy if we are in a recession and I don’t feel secure in my job regardless of great deals on RE….That will be a biggie in 2008 and 2009 not just for me but anybody that is dependent on income for a living. If we get to a point where it appears the worst has passed and I have maintained a two income household then I’ll jump in even if there is more down side on prices. I am not trying to time the market perfectly. I anticipate sometime in 2009 right now. Thats my 2 cents.

Lost Cat, I think you have the right concept but your timing is skewed IMO. Here’s why, and I don’t mean to be contentious:

You’re comparing the turn around time of a stock bubble with an asset (housing) bubble. Stocks can be sold, go up, go down, or be purchased in a single day, sometimes multiple times. Physical assets like a house take months to do the same if not longer.

With inflation rising, i just can’t see today’s prices looking out of touch or even expensive in 5 years from now.

No doubt inflation is rising, but inflation is a measure of costs, not ability to pay for those costs. For that you have to look at incomes. Incomes have been stagnant if not down for the past 3 years where economic growth has been at all time highs. The translation there is wealth is not filtering down into the middle class. There’s an MSN article today on CEO’s making 364 times what you do.

Go to Zillow, accurate or not, and pick a house in your zip code. Go to graphs and look at the pre-2004 and post-2004 trends. Then follow the line from pre-2004 until it reaches the level of pricing today. My guess is it will take you well off the graph to about 2020. The point is prices cannot stay this high while incomes catch up.

And think about it, a house is like anything you buy. It wears out, get olds, breaks down, requires maintenance, repairs, fresh paint, the whole 9. But we know over the long term prices go up, while things like cars, that do the same thing typically go down. So why do houses go up? It’s because incomes do and nothing else. Dramatic increases and decreases are the result of other circumstances like the credit nightmare of the past 3 years, but over time housing has no choice but to track with what people can afford. The question is can prices hold out for the 10 years or more while incomes catch up. Factor in today’s credit market, declining wages and increasing layoffs, and the obvious answer is no way. Prices have a long way to come, and it will slow and painful.

There is no protection against fraud unfortunately.

I think that just about everyone on this forum agrees that there will be a lot of houses on the market due to foreclosures, sellers who have to sell, etc. What we have to keep in perspective is the huge decrease in available, qualified buyers in relationship to the amount of inventory. Unless a whole new round of creative loan products for deadbeats hit the market, it’s going to take quite a while to get the inventory in line. I believe that you shouldn’t buy a home until late 2010 (at the earliest) and that the bottom won’t actually be seen until late 2011 or 2012 (if you want to pay the lowest price. Keep in mind that if you miss the bottom by just $50k, your taxes on that extra $50k will stay with you as long as you own that house. An extra $500 per year (if you stay in the house for 10 years) is $5000 more than you would have had to pay if you just wait until you know that the bottom has settled. The chances that prices will start ramping up again quickly after the bottom has revealed itself are slim to none………..so you’ll have plenty of time to look around and find exactly what you want/where you want…….. if you have a 20% down payment plus closing costs and a good credit score. Bottom line: There’s no reason to rush to be a homeowner anywhere in CA before you are convinced that the bottom has revealed itself.