[Porsche-O-Phile]

Counterpoint:

Well, it's just a thought but I've got a few reasons for looking now.

I've been kind of bearish about the market out here for some time and FWIW I do agree that there's going to be some continued decline and a certain amount of volatility for a while. That said, there's some other factors to consider:

1. Timing. As time moves along, overall RE prices may dip a bit, but lending standards are also going to get a lot tighter. We're already starting to see that. People in my situation that haven't been owners, don't have equity built up and don't have tens of thousands of dollars sitting around will continue to be shut out of the market - not by price (as was the case until now), but because they won't be able to get financed. Estimates of how tough the lending standards will get run the gamut and are anyone's guess, but one could foreseeably see a situation a few years from now where a person without 20% down cash, full closing costs in advance and an 800+ credit score will get the door slammed in their face in certain markets. I'd love to be the guy with the $100,000 in the bank and the 800 FICO at that time, but that's dreaming. As such, I need to monitor both trends and try to get in when I think I'm close to the intersection point of both on a graph versus time.

2. Market resilience. I'm certainly no believer in the "there's no bubble" or "this time's different" nonsense promulgated by the NAR and their puppets. There most certainly IS a bubble and this time is NOT different. However, certain markets (including SoCal) have shown extrordinary resilience to the flattening/declining trends that are massacring a lot of other markets. Certainly things are flattening and declining a little here now too, but not NEARLY at the rates of some of the other "rapid growth" sectors from a couple of years ago. Part of the reason is likely that SoCal is a very attractive place to live and not just for U.S. citizens. There are THOUSANDS of homes that have been/are being sold to Asian immigrants and other people from other parts of the world. It's not just domestically-earned dollars that are propping up this market, there's a lot of influx of foreign money too. As such, for as long as the ROW finds this area desirable, they'll continue to come here, bolster demand and keep prices a tad more resilient than other, less desirable areas of the country (from a global market perspective) might be.

3. Rent/purchase gap. At present, a bit of a weird thing has happened. There is a fairly sizeable gap (25% or more) between a rent payment on a particular property and the corresponding mortgage payment on it. This has a lot of implications including renters (like me) being "stuck" and shut out of the RE market to date (it's really only been great for those that already owned). Also, it means that people wanting to buy larger, multi-family units or rental properties simply can't make the numbers work to justify it (I've looked at several and there's simply no way to make the math pencil out - the rents won't cover the mortgage. Ever.) Over time, I see rental prices creeping up while mortgage/prices to buy slide down a bit, closing this gap. As such, the way I look at it - I'm eventually going to be paying $X,XXX a month to live here regardless. It's my choice whether I want to spend it on a rent payment or a mortgage payment given the choices I make now. It'll end up costing the same amount to put the roof over your head in a couple of years either way, so why not get SOMETHING for it?

4. Historical performance. Bubble, decline, recession, whatever. If you hold RE long enough, especially here - you WILL make money on it.

Those are some of the reasons I'm looking now.