“Bullish! Best time to buy... EVER!”
I totally agree. People with the money and credit will make out like fatcats. I was just talking to the better half and she agrees that as we have been waiting for the right time to buy a better property the wait is still worth it. Home prices will no doubt drop as that 20% equity position rule kicks in. We are already seeing $700k homes go for $550 and $450k go for $325, so this hopefully will drop everything into the $275to $575k range, which is perfect for what we are looking at.
I can’t help being sarcastic. We had a spate of posts along those lines, “it it time to buy” about a year ago. Since then, the Sacramento area has fallen around 30%. Everybody Sacramentan who took their advice has lost their down payment and much more.
I now live in Yuba City, which is a backward little cowtown an hour north of Sacramento. We act as a suburb of Sacramento, and house prices here are down about the same as Sacramento, year over year. Last fall I found a house I just loved listed at $340,000 that sold last July for $250,500 at $120/SQFT — a drop of 26% in 8 months.
With the avalanche of foreclosures set to hit when the Option ARMs reset over the next 18 months, price pressure will be further down, and down hard. Sacramento area house prices can’t go down forever. A bottom has to come in. But a bottom has to be based on fundamentals, and those fundamentals are not saying the bottom is in.
In the meantime, lenders like Fannie and Freddie will get their heads handed to them while all those Option ARMs reset and the default rate goes through the roof.