In the end, only you & your wife can decide what is best for you but I think you already are aware that prices are going to fall. How much they will fall is up for debate. IMHO, the prices in SoCal will probably fall 30%+ in some areas like La Jolla, Del Mar and the other coastal towns……………. 40%+ in areas like Tierrasanta, Chula Vista, San Marcos…………and 50%+ in places like Temecula, Riverside/San Bernadino. I may be dead wrong but all the signs are there. Too many foreclosures that will eventually be sold to new buyers will set the standard for comps in the various areas and much tighter requirements for borrowers will weed out many people who “want” a home but simply can’t afford it. If you read the various blogs and statistics from some of the bubble markets, you will see the same problem that San Diego is experiencing:
*Rising inventory of unsold homes
*Rising foreclosures
*Lower sales each month
All of these will force prices lower and lower until they reach a level where people can qualify for a mortgage. That’s the way the market is supposed to work and it will eventually correct itself. The median priced house must be affordable by the median income or the market stops dead in it’s tracks. Presently, it is not. Prices must go down. If not, there will be a much larger problem due to the majority of households being priced out of buying or renting if the exaggerated prices were to remain in effect. The median income household won’t even be able to rent anything more than tiny hovel in Bonsall if prices had continued the way they were. And for the investor: The rent has to cover the mortgage, insurance, and taxes……………. AND show a profit.
BTW: You can sell your home in CA for a flat fee of only $4k + closing costs through Redfin. You don’t have to pay a realtor 6%. If they had been in SD when I sold in 2005, I would have used Redfin. Back then, houses were selling within days of listing (if you had a really nice property) so I negotiated with several realtors and listed mine for only 4%. Of course, things have changed now with a glut of inventory on the market so if you didn’t use Redfin, you would probably have to pay 6%. Good luck with your decision.
