If you’re prepared to ride out the cycle then $325k may not be a bad buy. It does represent a 27% decline off peak, and even the most bearish among us would put that at or past the halfway mark of a catastrophic return to trendline correction. You might want to bear in mind that similar homes were selling for about $150k in the mid 1990s at the bottom of the last cycle. It won’t get that low this time, but the low $200k range is not beyond the realm of possibility.
The trick is trying to figure out how long that cycle will take to play out. Is 8 years too long for you to stay in that house?
You want to keep in mind that if the R-T-T correction does follow through your position will very likely be underwater for a while. If mortgage interest rates go up during this period the trough might last for several years.
Personally, I’d hold out. There are going to be a lot of foreclosures in the Temecula area before this is all over. The only positive on your current offer is that interest rates are really low right now, and they probably won’t be as low by the time the market bottoms out.
