What do you think?
There are some guys here who are even more gloomier than me. I predict house price will continue fall for another year. When it settle down, we will find out to be back to 2002 - 2003 price, which is 30-40% drop from peak to trough.
This is my guideline to decide how much to offer for a property. I always check on zillow.com for its historical price trend. The price I will offer is the lowest of these two criteria: it is at least 30% discount from peak, and it is back to 2003 price. I will never raise my offer by penny above it, no matter what the current comps.
Here is one REO property I am interested. Its peak valuation on zillow is 1.1mil, and its 2003 price is around 750k. For it, I am going to write a offer for $750k. I know right now there must be some suckers willing to pay over 800k on it. I won't regret if I did not get it. Let's those suckers overpay. I am patient enough to wait for the right moment.
What do you think?
From all your postings, you seem to have your own strong opinions, so why do you care what other people think?
>>>>>
I do appreciate your opinion.
Lenin - As you know, prices have dropped from the late 2005 peak, but they aren't inline with affordability fundamentals - i.e. housing shouldn't be more than 4 times your income, aka, if you make 100K, you can afford a 400K home, assuming minimal other debts. Even this 4X income level is a bit aggressive, but I'm willing to concede that level because San Ramon is a nice town with good schools and weather.
The average income in San Ramon from 2007 is $116,108, according to http://www.bestplaces.net/city/San_Ramon-California.aspx. According to Trulia, the average sales price from Jan-Mar 08 is 721,189. So, we are now at a 6.2 times income to housing cost ratio. In order to return to affordabilty fundamentals, average home prices would need to drop to $464,432, which is another 35% drop from now.
I know others may disagree with the above, but it's just my opinion, that's all.
Whatever works for you.
From all your postings, you seem to have your own strong opinions, so why do you care what other people think?
There is one more criteria, I will never pay more than 1/3 of gross income towards PITI. I saw so many people paying 50% of their income into house, left little room for their financial flexibility. They are not buying a house to enjoy life, they are gambling and many of them have lost.
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