NSR, I thought the whole argument is based on an assumption that we will see a 20% drop in price and a 1% rise in rate. If you’re talking about uncertainty and what can happen in the future, then there’s also a possibility that rates will drop as well. So, if you wait, price stay flat but rates drop to 2%, then it would still make sense to wait. You’re the one who posed the assumption, so I’m just working with what you assume. If you buy in 04 in Mira Mesa, you’re already back to even at this point.

I agree with you, if you need a place to live, and can fork the bill for PITI on a $800k house, go for it. Just don’t get pissed if your neighbors buy their house for less. The question is, how many can truly afford a $640k loan and still save for retirement + children’s college fund + still live comfortable (i.e. travel and go out to eat once in awhile). You have to be making about $250k/year at the very least to do that.