Handling Unpredictability

The market is very unpredictable right now. But here’s what I think.

The short answer is it depends on where you’re buying and how you’re financing your purchase.

Prices came down considerably in 2007. In some parts of L.A., we will probably see further price declines in 2008. The more desirable areas won't suffer as badly.

2008 will definitely be a good year to buy. The reason is that even if the home isn’t quite at the bottom, it’s close and sellers are still willing to deal. That means you can offer less on a lot of houses and get your house at rock bottom price. I just did this with a client in Woodland Hills. Even in this declining market, the house is worth much more than they paid.

Most experts are predicting a recovery in 2010. Some are predicting prices will start to go up again in 2009 and some are predicting it will still be a slow market.

The biggest question is the mortgage market. Right now, it’s still very tough to get a loan (although it's better than August). 100% financing is nearly impossible. Even 90% financing is tough to get for most buyers. Until the mortgage problems are solved, prices won’t start going up again. But once they are, people will start jumping back into the market because in many areas of L.A. prices have become very reasonable.

In 2008, the best times to buy will likely be the spring and fall. However, if you hear news that the loan situation is improving, you’ll want to buy because that will signal the beginning of the end of the declining market.

Of course, I can’t guarantee any of this. But this is what I think.

And here's what some others think:

• RealEstateJournal.com suggests the worst of the housing slump may be over.

• CNNMoney.com suggests things may get worse.