I’m not buying this time around, but if I were I’d approach pricing with an open mind. As SDR said, instead of looking for specific pricing I’d be looking for that point of equilibrium between inventory and sales activity. Like when the number of actives approaches 300% – 350% of the number of monthly sales.
Right after the market reaches that point I think the volumes will pick up and start creating shortages of inventory in the better areas. Once the buyers are competing with each other the pricing will start to increase.
Where that point will occur is anyone’s guess, even if using the past trends as an indicator. I think anyone who uses an absolute as their point of reference has an 80% change of being wrong because the trend could wind up bottoming out higher or lower than that. It would be a real shame to miss an opportunity simply because you thought it *should* go lower. Market psychology is an economic fundamental in the residential RE business, and there is no way of knowing when that psychology is going to turn.
Depending on prevailing interest rates, I think a lot of people might take a more positive view of buying once the monthly rent multiplier for an average house drops to about 175 or so – meaning a sale price for that house would equal 175x that monthly rent. $2,000/month rent x 175 = $350,000.
The more pessimistic players will wait until that rent multiplier drops to 150. $2,000/month rent x 150 = $300,000.
The last time around the typical GRMs dropped to as low as 120 in some areas.