I am a geezerette, and I’ve been through my share of recessions. I know that this correction will be different than any I have seen, but I would be very surprised to see prices fall as far as you think they will.
I have looked at several short sale and reo properties, and the banks are taking hits of $100k and more in the asking prices. Unfortunately, it’s not enough, and I believe they will be getting 50 cents on the dollar, when all is said and done, if that. However, the axiom is true: when prices go down, interest rates go up. I believe this is going to happen sooner rather than later, as I think it’s going to hit the fan before the end of ’08.
The cost to buy right now, if you can get a good deal, is reasonable. With a 30-yr. fixed, PITI + HOA is about the same as rent. A 7-yr fixed IO, no-neg, no pre-pay penalty is cheaper than rent, and you can always pay down the principal during that period. Of course, determining what is reasonable is the key, isn’t it?
