While there are varied opinions & widespread speculation about what is going on in the real estate markets locally & nationally right now, there are a few things that are indisputable:

1.)  Interest Rates are DOWN --The Fannie Mae 30 Day Yield (basically an overall average of interest rates offered) had the interest rate on a 30 Year Fixed at 5.67% or about 5.79 APR for January 2008 which is actually lower than the awesome rates offered back at the peak of the market in January of 2006.  January of 2006 had interest rates at 6.11% or about 6.29 APR--nearly .5% higher than today.  At $0 down & a purchase price of $417K your payments on a 30 year fixed would only be about $2,400 per month, versus $2,525 per month in 2006. 

Taking into consideration the price drop of roughly 17% according to Case-Schiller & DataQuick indexes (See #3) the same home that cost $417,000 in 2006 will likely cost $346,000 today.  So, the cost of ownership for the same house at the current price & interest rate is actually 20% lower overall than 2006!              

(Loan Information courtesy of Tom Weikel of San Diego Mortgage Network #858-569-3200 x 227)                   

2.)  Inventory of Property is UP --As of today there are a whopping 18,205 homes available on the market in San Diego.

3.)  Prices of Property are DOWN --According to reputable reports including the Case-Shiller & DataQuick Indexes home prices are down 16-17% over the peak back in 2006.

4.)  Length of Time a Property Sits on the Market is UP--Homes are currently taking an average of 3-4 months to sell.  Homes are selling though, currently 3,125 homes are in escrow.

All of these factors come together to make it a great  time to buy whether as an investment or purchase of your own home.  Think about it, as the prices have "corrected" & come down from the peak astronomic gains made in late 2005 homes are becoming more affordable to buyers--that can mean YOU!  It's time to think smart & take advantage of the fear being created by the media & consumed by the masses.

Although it is sad for the people who are facing foreclosures, the reality is it can be a good thing for home buyers.  Both from the glut of foreclosures spurred by consumers getting in over their head with the dreaded & much talked about "sub-prime loans" & homes taking longer to sell there are TONS of properties to choose from with many sellers desperate to sell.  This puts the buyer in the driver's seat when it comes to negotiating offers with sellers. 

DataQuick So Cal Chart of Homes Sales Compared 12/06 & 12/07
All Home Sales No Sold
Dec-06
No Sold
Dec-07
Percent
Change
Median
Dec-06
Median
Dec-07
Percent
Change
Los Angeles 8,479 4,430 -47.8% $525,000 $470,000 -10.5%
Orange 2,985 1,731 -42.0% $630,000 $565,000 -10.3%
Riverside 4,542 2,503 -44.9% $432,000 $355,000 -17.8%
San Bernardino 3,357 1,518 -54.8% $370,000 $315,000 -14.9%
San Diego 3,823 2,468 -35.4% $495,000 $430,000 -13.1%
Ventura 1,023 590 -42.3% $590,000 $525,250 -11.0%
SoCal 24,209 13,240 -45.3% $490,000 $425,000 -13.3%
 
DataQuick NODs Filed in So Cal Between 4th Quarter Compared 2006 & 2007
County/Region 2006Q4 2007Q4 %Chg
Los Angeles 7,445 13,613 82.8%
Orange 1,983 4,276 115.6%
San Diego 3,150 6,151 95.3%
Riverside 4,528 9,913 118.9%
San Bernardino 3,538 7,288 106.0%
Ventura 794 1,504 89.4%
Imperial 167 401 140.1%
SoCal 21,605 43,146 99.7%
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As property takes longer to sell, sellers are forced to drop their sales price.  Homes are priced an average of 16-17% less than what that same home would have cost back at the peak in 2005/2006.  This home value "correction" is great for the buyer or buyer-investor.  This means YOU CAN BUY MORE HOUSE FOR LESS!!  Couple this with lower interest rates & you can get some really GREAT DEALS!
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The bottom line is that you have to do what is best for your financial health.  But don't be swept up by uncertainty & fear or the often failed attempt to time the market, right now is a great time to buy, so BUY!  Think about it, it really makes dollars & cents...