OC Buyer Bears Market Perspective

In the short term, the data and news seem to indicate that prices are either flat or sort of drifting down, depending on the specific data being evaluated and whether or not those data are in real or nominal terms. So there isn't much pricing risk. Cashflow-wise, renting is also very cheap compared to owning, which is nice. And, interest and mortgage rates are flat, negating any apprarent interest risk.

Looking out to the medium term, we see several factors that lead us to believe that housing prices are set to drop, among them: short-term price decreases, reduced sales volumes, decreasing affordability, tightening of sub-prime credit, the culling of "flippers" from the market, increasing housing inventory, the reduction of the attractiveness of OC real-estate as an investment option and net emmigration from the county among them.

From where we sit, if even only some of these factors were were to put downward pressure on prices, they would drop, but given they they are all are in play and have the potential to exert downard pressure on prices, we see the question of a downward price trend, not as a question but of whether it will happen, but rather a question of how much and how soon.

There is every reason to wait to buy, sit on the fence, watch the market, let inventories rise and prices soften. There's no hurry. The market is flat now and it has every indication of getting worse.