Market Update:

The recent spike in interest rates seems to have made buyers even more reluctant as activity has drastically slowed in the last few weeks. The vast majority of buyers are choosing to rent for a year or so until they have greater clarity on their employment prospects as well as home prices. It is my belief that the soonest prices will bottom is in 10 months, and it could be quite a while longer than that. However, one of the highest probability forecasts anyone can make right now, economist or not, is that inflation and the cost of borrowing is going to increase, significantly and for a long time.

Homes are trading at a 10-20% discount to what I believe is “fair Value” (please see Home Valuator Link at top left), and any further gains in affordability due to price drops will be consumed by increased borrowing costs.  

My advice for serious home buyers: buy now, buy conservatively, and don’t stretch; and keep 12 months cash-crunch, emergency fund reserves. Please see my most recent blog entry for more info and call Dave 415-867-6611.