if you like my blog then you know where we stand as far as how far the prices are going to fall further. so no point to repeat all of the reasons to wait once again here.
I went back and looked again at your wife’s point:
“–The rent is close to would-be monthly house payment. If we wait until summer next year, the price might be $40K less, but in the meantime we’ll have to pay for rent, part of which could have been used for principal payment.”
the whole idea here is what you are giving up in rent will be far less than what you may lose in depreciating value. We would have spend $24,000 in rent last year (we ended up spending $14,000 due to unforeseen foreclosure of our rental, but that’s another story for another day). Assuming $24,000 loss in rent, had we bought in 4S, we would have been looking at $100,000 loss in equity over the same period. had we bought in Temecula like a friend of mine did, that $24,000 loss in rent would be comparable to $200,000 loss in equity.
The question to you and your wife is are you two willing to roll the dice again this year. Remember, you would not be paying that much toward your principal the first year. Assuming price drop is only $40,000, as in your loss in rent, you come out even. But if the price drop is greater than $40,000, then that’s another story, isn’t it.
