Hi Dee -

I am a n 18 year vetern in North SanDiego CXty/oldwell NBanker Encinitas /CArlsbad. I am so surprised to read so many responses that the market is going to continue to plummet!

The reconery of this market is classic - there is no denying that the rise and fall of markets hapens - no matter what - every 10-12 years! This past appreciation market went on so much longer and the gains were no much greater taha we have seen in past busuniess cylcles - therefore its only =natural that we have farther to fall.

Howvever, the truth is in the puddin', as they say. I and many of my colleagues are working closely with tons of buyers and its a full-time frustrating scrampble for agents and their clients!. Right now the competition is FIERCE! Foreclosures, Short sales in particular are an incredible challenge for todays buyers - many are making 10-15-20 offers in certain price ranges!

Recovery of prices starts from the bottom up Currently, properties prieced 600 and under are experiecing multiple offers, often resulting in overbids. This recovery/overbid situation started in January for anything 300 and under. How long will it take to permeate the highr price ranges is anyone's guess, but there is no denying - based on my current, in the field experiences, that evertying will soon be on the road to recovery.

When buyers ask me - in the 700- price range - can we get it for less? Depends - if the property is properly price, the buyer is ALREADY receiving the benefit of a hugely discounted market. Multiple offers means only one thing - you have hit what The value price point is, and that is what the property is worth!

Try not to buy into the negativity and fera that permeates the market right now. If you are buying 700 and under you have reached rock bottom on pricing. Over that is still in transition. If you are buying 800 and above their is still room to negotiate.

Best wishes - buy what you love!

Dana Hasson
Coldwell Banker North County

Sara,

Because of the financial crisis we have today, you need to consider the financial market in general (not just the housing market) in order to understand what will happen to the housing market in the next 6 to 18 months. So let me reference a few things that billionaire investor, Eric Sprott, has pointed out recently.

"The shoe has yet to drop in other areas of the credit markets such as credit default swaps, home equity loans, prime loans, auto loans, consumer credit cards, and commercial real estate. The losses in these areas have for the most part only just begun."

"Although ultimate quantification remains a grey area, one need only scratch the surface to come up with $2 trillion of potential losses that have yet to be taken in the banking system, on top of the relatively tame $500 billion that has so far been written off mostly in subprime."

"In a recent note to clients, Richard Bernstein, chief investment strategist of Merrill Lynch, wrote that the credit crisis is “broad, deep, and global” and “far from over” for financial companies. He further wrote: “Investors are significantly underestimating both the scope and the extent of the credit bubble and the consequences of its subsequent deflation” and that “the problems are not confined to large institutions that are overexposed to U.S. subprime loans.”"

http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

2. when all the properties that are leveraged to the point where it's as cost effective to walk away
~~~~~~~~~~~~~~~~~~~~~
What kind of people live in this country now that they believe it is "cost effective" to reneg on their contractual obligations? This is very sick.

Sara,
In my opinion, your best bet is to slow down and keep watching the market. If you purchase now, yes, in 6 months it is VERY likely you'll be upside down, owing more than what you're property is worth. Knowing you cannot sell or get out is NOT a good feeling. What would happen if you bought a place and ended up wanting to move because of dreadful neighbors, job loss or relocation, or other unforseeable unfortunate events? If you don't have to, don't buy now. In 6 months you'll probably get much more for your money in your price range of $3-4K. Keep yourself pre-approved. If you pay attention, you'll know when the market begins to level out. That's the time to make your move. Good luck.

Thanks Sara for your answers. Since you have a long-term plan to stay in the home and are being conservative, I would suggest that you start investigating the neighborhoods you are interested in, learning the market and knowing when a deal is a "deal" for you. Then purchase the home if the numbers make sense for you and your budget. I'll be hosting a seminar on buying in this "foreclosure" market in October. Let me know if you'd be interested in attending.

Sara,

Prices may continue to drop but we see a leveling effect and signs of the bottom. There are still a lot of short sales that need to be sold or find their way into foreclosure.....this market sector will direct the overall market for a while.

Sara,
No one can answer your question with certainty. Prices will stop dropping when 1. Sellers refuse to go any lower, and 2. when all the properties that are leveraged to the point where it's as cost effective to walk away (REO/forclosure) are liquidated (this also involves how long banks can afford to take discounted losses and how long the government will prop them up). Data from OFHEO indicates a slowing in falling prices and an increase in sales--but this is only for one quarter which could be an aberation or the beginning of a trend indicating a bottom is about reached.
I have a home for sale and I would be willing to accept a 5% less from what comps are selling for now--but no more--I'll take it off the market and rent it or let it rot before I'd go lower. I'm guessing other sellers are close to the same reasoning (unless they are in short sale/foreclosure territory--if there are so many of those left that sale price drops 15% or more from where they are now, I wouldn't worry about a home, I'd prepare for anarchy and invest in arms and amunition.--so IMO we are getting close to the bottom. If you presently owned a home and were relocating or upgrading you might have a better feel.
Do some research and go with your logic.

Here is another link specific to Southern California - housing prices and foreclosure data as of end of July 2008. You can search here by city and this should help you find specific data which you can compare to my earlier answer with the 2nd quarter national numbers. Link http://www.latimes.com/classified/realestate/news/la-homesales-db…
News tonight says Federal Government about to take over Freddie Mac and Fannie Mae mortgage debt in some form on conservatorship. Keep current and stay informed. Good luck, Emily Medvec

Answers for Dee: No this isn't an "investment", we're looking to buy a home where we can stay for 5-8 years. We're planning on doing 3% down/FHA, so yes, a big drop would take away our equity. But we're being conservative in how much house we can buy, and are staying within reasonable limits.

More than likely the dive will continue for a long time. There's about 1/2 million homes in California financed by Option ARMs, representing about $300 billion in mortgages. It's how your would-be neighbor making $85K bought a $600K home. Resets on those are just getting started. Expect very bad things to happen.

Look at the link below....Foreclosures are only gaining speed.

Hi Sara,

Many buyers are struggling with the same question. The Union Tribune today had an article about how San Diego is now undervalued; but that the foreclosures may go down another 5 to 10 percent in price in certain areas. Check the article at http://www.signonsandiego.com/uniontrib/20080905/29.html

Will this be an investment or a home for you? How long do you plan to live there? Do you have a down payment sufficient for the mortgage companies requirements? Will the drop in prices take away your equity? Also, the prediction of higher interest rates next year will affect buyers' affordability. You would be in the same monthly payment if the house price went down and the interest rate went up 6 months from now.

Let me know if I can answer any other questions or clarify what I just wrote. Good luck!

Look at the statistics and the latest report from OFHEO, Office of Federal Housing Enterprise Oversight. The most current press release 08/26/08 headline states "Rate of House Price Declines Slows in Second Quarter" - Here is the link for the 87 page report - http://www.ofheo.gov/newsroom.aspx?Q1=1&Q2=0 Click on the Press Release for 8/26/08 for solid information to make a more informed decision about your local market. Good luck, Emily Medvec

You should be "worried about your investment" if you are going to view the house as an investment. Making the wrong decision will cost you thousands. Ask the people that bought in 2005. Are you in a hurry to buy? It seems that housing prices are only going down. Good Luck