Here’s my proxy …
I’m looking for 3/2 SFRs in bread-and-butter areas for rental purposes to be priced at about zero cash flow with 20% down before I even start tracking seriously. Bread-and-butter SFRs would be in areas like Clairemont, Serra Mesa, Kearny Mesa. If things go far enough down, then maybe even Point Loma will hit zero cash flow and the others areas slightly positive. I recently ran the numbers for some low-end Clairemont houses, they were still 15-20% too high for zero cash flow.
Assuming rates and rents are about where they are today, I’ll start looking to buy at another -15%. If long-rates go up 1%, I’d need to see another -25% or so. If long-rates go down 1%, it might make sense 5-10% below today’s prices. If rents drop, I would need prices to drop proportionally.
