Why buy now? We bought in Fallbrook in 2003 for $425k. During the subsequent run-up, price on our house went all the way to $810k (based on neighborhood comps). Several houses in the neighborhood sold at that point and most of them are either back on the market (and not moving) or in some stage of foreclosure.
Our house has settled back into the mid- to low- $600k range. The five houses in our immediate neighborhood that have been for sale since the beginning of the year are all back off of the market. In talking to the neighbors, only one had a decent offer and the offeror had to back out because they couldn’t qualify for the mortgage. Four of the five houses were for sale for the better part of four to five months with little foot traffic and no serious offers.
While I realize this is anecdotal and not hard data, it does point to the fact that the pool of buyers is getting rapidly smaller due to new lending guidelines (and the higher cost of funds) and the intrasigence of sellers in accepting that this isn’t 2005 (or even 2006).
Once you add in the inventory overhang (with builders slashing prices and offering significant incentives), it would seem that while a crash might not be in the offing, a sizeable “correction” is.
I would definitely wait before taking the plunge, and wait for at least a year, if not 18 months.
