If you ask people when was the worst time in history to buy a house most would probably say 2006 or 2007. Those were terrible years to buy a house but I think today might actually be worse. In 2006 you still had prices going up in some areas and even if prices were not going up they were not cratering like today. In 2007 sales were at a standstill but prices were not falling much at least until late in the year (mostly because of the lack of sales). Today however you can buy a house one month and next month it can be worth 20% less. Today is the worst time in history to buy a house looking at month to month values. Sure prices have dropped on average 30% since last year but the rate that the prices are falling is increasing. It has slowed slightly for the "spring bounce" but come fall they will probably take off like jet.
Here's an example of what I'm talking about.
In May of 2008 a bargain shopper "snapped up" 4467 Cabot Drive in South Corona (Dos Lagos), the home is a 3 bed, 3 bath and it is 3413 s/f. He was probably all giddy at his apparent steal. You see this house was previously purchased in Dec 2005 for $1.045 million. He stole it for $560k after the bank took it back in Dec 07 for $753k. Sounds like a great deal, right? He bought it for 47% less than the previous owner. How can you go wrong?
Here's how. Fast forward 6 weeks since he closed and his neighbor (a bank) with the same floor plan has listed for $499k. 4455 Cabot Dr was last purchased in Sept 2006 for $975k, lost to the bank in early June for $621k and has just hit the market for 11% less than 4467 Cabot only 6 weeks after he closed. Sure I suppose it could go for more than asking but that is highly unlikey
Anyone thinking that this is just one case cherry picked might also take note that just up the street at 4365 Cabot Drive there is a 350 s/f larger home (REO) with 2 more bedrooms listed for $519k. All three of these homes back to the golf course so there is little difference in regards to lot premiums. The best lot is actually this last home. It sits near the tee box so getting peppered with golf balls is not the issue it is likely to be with the first two homes. (There is another one of these 3800 s/f 5 bedroom homes for sale for $529k just around the corner from the first 3 homes)
Knife catchers beware, currently the knives are razor sharp! With rising foreclosure numbers and home values still higher than traditional ratios the pressure is going to keep dragging the prices down. You can lose a lot of money in a very short time these days.