I think your question pressupposes that a person can wait, and that ability varies pretty dramatically from person to person. Some people have idiosyncratic needs, e.g., one particular elementary school. Within that district, they may have particular needs for floorplan, etc., which narrow the field even further. While the family might prefer to wait for a 20% reduction, their needs may drive them to buy now even understanding that the value may fall because there is a cost to not buying (i.e., not having the right floor plan or not having the kid go to that elementary school). This is especially true if they plan to stay in the home for 10 years.
If you’re looking at some market segments, I wouldn’t buy right now at any price reduction. For example, I wouldn’t buy a $1.4M home in Escondido even if it were 25% below market value because I think we might see a big correction there this fall and that there might be some incredible value opportunities. In other market segments, I think a 10% reduction would be a great win and worth the purchase right now. The distribution of the crash is not going to be felt evenly; some markets are going to “pay” more than others, and, if that is true, then it’s important to know the risk of the impact. I think if you look at a market segment’s Months of Inventory, you will get a decent idea as to how healthy that particular market is. Analyze them be geo/price segment and don’t lump them together because you’ll muddy the results that won’t give you the kind of crisp information that you need to make decisions.
I don’t track Temecula, but I suspect that it is similar to Escondido.
