My gut says a 15% correction in SF RE value means the price is brought down to a reasonable, rational level. An additional 5% reduction would mean to me people have taken out the “San Francisco Premium” (for being ‘san francisco’ and there are no more stuff being built and its surrounded by water on 3 sides and it’s a great place to live). A further 10% reduction (total of 30%) would mean the entire economic mood in the US and world is so pessimistic that people have decided to cash out and put everything in gold or put money under their mattresses.

So I would go with 20-30%.

* personal situation. You know your significant other (or lack of), if you love your job, if you plan on extending the family. You know your prefered lifestyle (downtown NYC vs north dakota). Re your significant other. This is quite important as joint ownership and other “details” can be important. You can use realestate to transfert assets from one spouse to the other OR you can use realestate to secure you personal belongings “against” your spouse. Thus motivating a buy at an odd time (rather risk to loose 20% in the real estate market than loose 50% in a divorce)

* your personal wallet and piggy bank. I dont believe you should buy and invest your last shirt. Start by saving with automatic transfert to a saving account. buy CDs or other no risk bonds. See after a year how you do. See how you FEEL about saving money.

Ideally, I’d say that you should give a thought about buying realestate when your piggy bank is twice the size you need to reasonably buy.

What’s that reasonable size?

a wild guess is 30% of a north dakota home. So if the home is 80K. You can safely buy with 20% down + 10% cushion for the bad days. (or 10% + 20% depending on the quality of the financing your find).

another wild guess is 40-50% for a sf property. something like keeping your cushion at 20-40% of the pruchase value of your house. the first 20% of your cushion should be invested in ultra safe investments, and anything above can go agressive trying to beat the return rates.

IMO those numbers are ultra conservative. Of course, you can start with less – but you need additional guts. And waiting to have more … then, you take some risks by lacking diversification of investments. For that purpose.,

Another aspect is your own roof. How do you feel about your own roof. Rent or own? are you a compulsive remodeler? is owning your own roof a security for the coming years? or could it be a chained ball? Are you ready to tie your life to a large investment? or do you feel better starting smaller?

First time buyer. From my few investments, I’d say that each was unique, was made under unique circumstances, and for unique reasons. And at the end, I reached diversification with properties that are very differents from one to the other – the oddest one being a frozen asset for the next 10 to 30 years. Your first buy doesnt have to be your very own SFH and CERTAINLY NOT your “multi-million dollar mega mansion”. If you have enough money to buy a 8 digit property in SF, be nice to yourself, and buy a tiny liquid place first – even at a loss so you can dry run the whole buying cycle, and dry test everything.

Better waste 6% in commission on a 800K condo, then gain the experience and get a 2% discount on your 8 digits, than be a newbe on a 8 digits. (assuming you dont want to buy “at anycost because you wouldnt care less about so earthly money”)

trade up. if you have the choice, i’d go for sell low buy low. or even sell high, buy low. Low not being the price tag, but your affordability index (includes but not restricted to mortage rate).

If you are ready financialy to trade up, but not ready physically (money but no need or unindentified needs), buy something else small elsewhere. Small is usually very liquid. So when you need to trade up, sell your investment property, put your house on the market, and start house hunting. The small property money being your downpayment and easing the process. You might not even need to sell your small property, and gain twice in the deal.

Where to buy small properties? that’s “stock market” investment. you can win, you can loose. But the amount size is usually worth some risks. I have a sweet spot for tiny units in downtown. rentals for (advanced) college students and young graduates.

It’s hard to say “jump-in” for the first time buyer. “Dave” was smart in that he got out before the same boat that rose with the tide sank with it. Not many homeowners are that motivated to put up with the hassle of moving twice. Anyway, sure, you could argue that he bought low, sold high, and bought lower. But like investing in stocks, it’s hard to time the market. But it’s hard to argue with his strategy too.

Anyway… the buy when “you,and only you, are ready” is a bit generic. Perhaps a bit more comprehensive post on varying factors on when to buy for various category of buyer is a feature.

When to jump in for the first time buyer?

When to trade up for the existing home owner?

When to plunk down an investment on a multi-million dollar mega mansion?

I’m a would be first time buyer and I think there are a lot of factors preventing me from making the investment….. but that’s for another post!

E.

[Editor's note: You're killing me! But thanks for the ideas for some "other posts". Care to help with that?]