I think everyone can agree that prices in SD are going thru a downward trend – the difference of opinion is how much will prices drop from their peak.
In my opinion, prices aren’t going to drop as much as most people on this forum believe. In fact, I don’t think there are going to be that many people who time the market correctly, selling at or near the peak, who will wait 2-5 years, and buy at a low enough level to have justified renting for several years. Let’s face it, if you sell your house now, you’ve already missed the peak. Most neighborhoods seem to have peaked in the summer to fall of 2005.
Let’s say you sold in the summer of 2004. You may have missed out on a lot of appreciation over the 12 months up to the summer of 2005. Some areas jumped 15%-plus during that time. If prices drop 20-25% from the summer of 2005 until the bottom of the market, and you did miss out on the additional appreciation, you really may not have made that great of a move, considering an 8% cost to sell your house, and the cost of renting and moving. On the other hand, if you sold your house at or near the top of the market in your area, you’ll probably have made a good move, even if prices don’t take a huge dive.
I’m not criticizing anyone in particular who sold in 2004. My wife and I sold an investment property in 2004, and paid the capital gains – and looking back we’re glad we did.
