First, let me say I’m guessing, and we all are, really. And it’s all a bit pointless, except as entertainment, because if you believe it will take at least 3 years to get near the bottom, then you’re not going to be acting (buying) any time soon. Planning the exact date of a home purchase more than 3 years out is…. sick!
Many on this board are, frankly, a little desperate to buy a home at a price they can afford, and for many that needs to be a price near the bottom of a cycle in what seems to be an incredibly inflated market. I am in this category, so I understand the sentiment.
If you are desperate to buy, but only willing to pay a price that can be achieved near a true CA market bottom, then you’ll really, really want the market bottom to come earlier than your logic will tell you. To quote Rusty, I’m just sayin’…..
It’s just too hard to be real precise about it. Back in 2000, I guessed to my friends that 2008 would be in a downturn, and the first real opportunity to buy again. I was just using the length of prior cycles as a guide. In 200, I didn’t see the hyper-boom of 2003-2006, driven by cheap high-risk loans, coming. I think it extended the last cycle by about 4 years, and an extra 50-100% price increase. So that extra hyper-boom air has to come out of the system now, on top of the pre-2003 normal cycle extra air.
Given that this last cycle was an unprecedented hyper-boom, how will that make this home price deflation cycle different? We don’t know, but the initial downturn has been sharper than in previous, more normal, cycles. This cycle is so big that government has intervened, and will intervene more (only on the way down, of course!). We have a longer way down to go this cycle, but we’re going faster. For what it’s worth, my guess is it might take about the same total time to the bottom. But an extra 1-2 years isn’t out of the question, which would take it out to 2013-2015. (This is the bottom, not the visible recovery when everyone can finally see it, which might be 1-2 years later.)
