As we looked more and more into one, I got to a point where I myself wanted one too. However, I believe everyone can agree that we are very much a down cycle of the market and it will be months, maybe years until it bottoms out.

We aren’t necessary trying to catch a bottom in the housing market. However, we obviously don’t want to buying a house that’s worth 50% less in 6 months either so it’s a tough decision for us right now.

Look into measures of housing affordability for Orange County relative to the nation over time. California in general and Orange County in particular have shown a lot of volatility over the decades. In a nutshell, OC is characterized by asset bubbles where the value of residential real estate has greatly outstripped the value of real estate in the nation as a whole. Then there is a bust, where OC returns to earth and follows the nations general trendline. Right now we are in the largest bubble in history, so OC has a long way (perhaps 50% of value or more) to fall before it is again in line with the nations. The past is prologue, and what has happened before WILL happen again. I sold my house last year (missed the peak by a few months I think) and don’t plan to buy in OC again till probably 2010. I moved out of state for the time being.

The point of that is I would suggest you be very careful… lest you become a textbook knife catcher.

-limeade