We need to ask ourselves why that house we want in, say, Carlsbad is even priced at $800,000 to begin with, and not $400,000 or less like it was in 2000. Pure speculation, plain and simple. Whether it was investors or even just families, the psychology of speculation and the expectation of appreciation drove 90% of that price increase, not fundamentals. All buyers should arm themselves with this mentality: I don’t care what the comps are, and I don’t care what you paid. My baseline is a little more than $400,000 for that house and I have all the time in the world. It’s a new round of roulette now and the minimun bet is my starting price, not the amount you let ride and lost.
