Dr HB and all-
I get it that we’ll still see a decline in housing prices for some time to come. But, if you’re going to buy a house and live there for 20 years, is 2009 really that bad of a time to buy a home?

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Wincomp you have to thinnk about ‘possibilities’ and ‘probabilities.’ What you “plan” to do has not much to do with what can happen. You may, right this moment, ‘plan’ to live there for 20 years BUT
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(1) You can loose your job and have to sell
(2) If married, you can get divorced and have to sell
(3) If not married, you can get married and the house you bought is too far from where your new spouse works and you need to move to split the difference on the commute, or you have more kids than it will hold….and you have to sell
(4) You or your spouse or a child get ill and the medical bills end up out of sight and you can’t afford the house and you have to sell
(5) You take a job somewhere else and have to move and have to sell
(6) Your parents or in-laws become ill and need help and you have to move closer to them and you have to sell
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And the list continues with all kinds of reasons why you can easily not being living there for 20 years. In the time before the housing bubble (let’s call it B.H.B.), the average time someone lived in a house was around 7-8 years. While some would buy a bigger house or downsize to a smaller house, most ended up selling the house for one of the reasons above.
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So the question you need to answer is if you bought now, and prices continue to fall (and Case-Shiller says they will), and in 9 months you lost your job or got married or divorced or took a new job too far to commute and had to sell, could you sell and could you afford the loss?
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Never ever ever do anything where you have to rely upon all your plans going exactly right to make it work. Assume the worse case scenario and then see if what you want to do makes sense. If your plans will fall apart unless everything goes as you plan…..well…..only answer is ‘don’t do it.’

I noticed this article in the NYT about lender walkaways.

http://www.nytimes.com/2009/03/30/us/30walkaway.html?_r=1&th&emc=th

Is this a trend? And, is this a big opportunity for a non-risk-averse investor? I’d think that someone with an armload of quitclaim deeds and good timing could end up with some nice vacant urban land for almost nothing.