I’m not a realtor, and while I agree with general idea of your post, I think you have to be careful. In the North County areas where I’m looking, in the $700k range, you’re extremely unlikely to get 2002 pricing. Generally if you’re hitting someone in 2004 you’re doing pretty well, especially if you can push it to early 2004. Another metric is if you can get 30% off peak for the neighborhood you’re doing really, really well.
I’m seeing more and more properties listing for prices approaching the peak for the neighborhood. Those properties I’m passing on. Generally they won’t move, but if there’s some really special about it (view, killer pool and yard, granite in the kitchen, etc) it can close for a price that’s maybe 10% off peak. That’s too high for me, but apparently not for everyone.
So I’d say know the neighborhood, know what the peak prices were for comparable properties, know what things are going for now, know all the details of a property so that you can know whether a price was really an anomaly or if there was something really special about the property that justified the price. Then determine what you’re willing to pay. If this is your home it’s not just an investment decision, and the number of really good properties are limited (which is why they go for a premium).
