A 20% decline in an area like Clairemont from today’s prices for example would likely result in near-equilibrium of monthly carrying costs for purchase versus renting.
3/2 ‘s in this area are about 500-520K. 20% decline would be 400-416K. Rents are in the 1900-2100 range for 3 BR/ 2 BA. Let’s pretend that I am a first-time buyer and me and my spouse make a combined 100K. Once the price drops below about 425K or 450K we would likely choose to buy over renting since after tax considerations the monthly carrying costs of purchase would be within a couple hundred bucks of renting. Assume a 30-year fixed rate loan.
Depending on changes in rates and rents, this is how I see the bottom.
