It's will be over 20% by the labor day. I have been watching closely this spring and I think we are in the "bargaining" stage ie, yeah I might sell a little lower but I can buy a little lower too.

Capitulation and acceptance are not hear yet. The high end is which was predominatly employed in housing and finance and now laid off are now living off credit cards and 401k withdrawals. That will not last forever. The wealth destruction will go on for a couple more years.

The only thing selling in the nicer areas like Ellicott City, Towson, Annapolis are houses that are below 2004 prices. You have your exceptions where someone bought a dump and renovated it but overall prices are still about 20% higher for the income ratio. (And no I am not talking about the Direct Buy morons who over-upgraded the kitchen and bathrooms who want to make 200% on the dollar for what they spent pulling money out of the house)

If your in god forbid Baltimore City or PG county I say good luck. You maybe stuck in your house 20 years. Hope you like it.

For those on the side line, you have no hurry whatsoever. Right now we are in a severe deflationary recession.
Right now buying a home is just throwing money away vs. saving up a bigger downpayment next year and the year after that better homes are going to become cheaper and cheaper.

Do not expect 2006 prices for over a decade.

Deflation has not happened in most of our lifetimes. The reason is because median income are coming down. Housing will follow. The issue will be timing when to buy because of the macro-economic conditions. This will be when your start to feel the invisible "hand" creating 70's style stagflation.

If you don't think housing will be cheaper when interest rates come up to the normal 7%-8% than please enroll in a community college math class.

Interest rates will have to rise as soon as the Chinese cut off the Fed Govt's credit card. The US Treasury will have to raise interest rates to attract capital.
Right now the federal reserve is electronically creating money to buy t-bills. They are doing it out of thin air. Essentially printing money to buy debt. The "hope" is that this creates inflation. But till we have something we can sell foreigners that they want to buy and an export boom starts, we cannot recover.

In the l940's it was oil and weapons.

In the 1990's this was computer software and hardware from the opening up of the internet. This production has been quickly moving overseas in search of low cost creation locals.

What will it be? I hope not weapons but clean tech but who knows.

We do not feel inflation right now as it is all electronic and it is being used to buy up toxic assets. When the fed has to sell say 1 trillion in assets at a 50% loss they will leave 500 billion in the economy and that will turn into "real money" quickly creating inflation.
This is when you may want to start looking as your going to want hard assets like housing and gold. This is how we paid for Vietnam and how we will pay for Iraq and Afghanistan.

Any realtor who tells you that "timing" the market is not a good idea is drinking the kool-aid. They are not in your economic best interest, they are just a used house salesman trying to make a living.

This economy is not the same as it was 30 years ago. Mobility is an asset. Right now people are stuck in a homes and cannot move. The guy who did not buy is now going to end up with your promotion because of this. If your over your head because your have a huge HELOC I hope it was worth it. Mobility is an asset, not a house going forward.

Also we have a demographic problem coming up. A huge amount of Baby Boomers have to sell. And there are not near as many Gen X/Y kids to buy the move-up house as everyone who could buy in the past 7 years did. If you were smart and bailed in 2006 and started to rent like me you have a more positive net wealth than "owners"(bank slaves) with depreciating asset. What I have paid in rent is less than the bleed people have had the past 3 years. Add in the transaction costs and I can rent for another 2-3 years and still make out way better than the people who bought at the peak. Plus I have been able to negotiate a rent decrease for the past 2 years. Oh and yes I have all the fun stainless steel and granite and hardwoods that people craved during the boom. Just now I am not stuck with the decor when tastes change.

Hope this is a lesson learned that the idea of spending a $1 to save .25 cents when your house is worth 25% less than what you paid.

You were a victim of a ponzi scheme.

And if you need to buy a house now...

The market is still behaving irrationally on the seller end. Most buyers want to put forward an honest offer, not an insane one like those who bought a few years ago with interest-only loans, but the proof is in the listing versus sell price data.

That said, you can still find some good buys out there, but it takes patience enough to find them. And it's easier to exercise patience now that the market has really cooled and you're not in a bidding war situation and faced with the prospect of doing something stupid, like waiving home inspection.

Oh yeah, and you should expect you'll have to put some money down this time.

Adam,
Before you tell others to take a community college math class, you should take and English class (your/ you're).

I can't believe that your assumptions regarding the economy are correct + much of the price decline is related to foreclosures/ short sales. I hope you buy before prices start up again or you will be part of the bandwagon buyers that will push prices even higher. I do agree that we won't see 2006 prices (as a nation) for a while although I think it will be 5 years or so and less in many places in MD like HowCO.

Thanks for the comments, everyone.

housesitter, I'm not certain whether you're responding to the post or a commenter, but just in case it's the former: I didn't say that much of the price decline is related to foreclosures and short sales -- I said they're "not helping prices any." I've yet to run into anyone who thinks foreclosures and short sales push prices up. :-)

Buy a house now with a mortgage of $200k @ 4.7% and your monthly payment will be . $1,037. If you wait 3 years and the price on the same house drops enough to make your mortgage $160K, but you're paying 7% your payment will be $1,064. All hypothetical, but it's not just about housing prices, the bottom line is affordability.

The bottom line is that we need to continue to use the housing scam as a way for banks to get our money!

I think interest rates might go to 45%!!! Watch out!!

Personally - I think it is always a good time to buy.anything..at whatever price...go ahead just buy....out of fear...out of confidence..just make sure you buy!!