Most of us who don’t own would like to own at some point.  The longer you’ve been on this blog and other blogs of the like, the more familiar you are with current market conditions.  Some of us aren’t too picky with what we want in a home, others have specific needs due to work or family, etc.  It is difficult to find everything one could want in a home, but sometimes you come close.
So I thought an interesting situation, which I am also currently finding myself in, would be…if the home you wanted could be bought today at approximately 30% off the peak price, would you buy it or not and why?

I don’t think so.  It isn’t the 30% off so much as the market conditions and trends.  Why buy a depreciating asset?  Just because that asset has depreciated 30% does not mean it will not depreciate another 30%.  If I thought the re market was trending up from here, then heck yea, I would buy.  But I see no evidence of either an appreciating re market or or a bottom, or even a deceleration.  From everything I see, the train has just left the station and is picking up speed.  And we are happy in our leased home.
But, it is an interesting question.

Hmm… Depends on the market segment.  SFR in Irvine, maybe.  400sq ft condo anywhere, hells no.  Those things start at $220ish and 30% off isn’t enough.

To me it boils down to the math. If my cost of ownership is equal to my cost of rental, and I want the property, I would buy. If I am happy in my home, and I am saving money on my rent with conventional financing, I don’t care much what happens to the resale price of the house. That being said, nothing in the market is close to the breakeven cost, so I would not buy. Even with the 20% off peak we are at now, prices need to drop another 20%-30% before I may start looking in earnest.

For most of the properties I’ve seriously looked at, the answer would be yes.  I agree with oc_fliptrack that the bottom end wouldn’t make any sense.
SCHB

awgee - no doubt prices are downtrending.  i guess you seem to put more weight on value and prices than all else.  a less common trait (with the exception of those on this board of course ) here in OC. 
oc_fliptrack - i agree on the low end market.  i was referring to a home that you intend to buy when the time is right. 
IrvineRenter - your plan sounds good, even though it may not be the same one as mine.
socalhousingbubble - if the answer is yes, why haven’t you put the bids in at that price?
great answers, guys…

Yes.  I second IR, it’s just simple economics.  Rent and mortgage would be pretty closely aligned at that point and it makes more sense for me to buy.  Also, the homes that I would want to stay in for the long-term would be within my price range at that point.  Combine the two, and I’m buying.  I’m not really concerned about whether prices will fall further, because if I bought at a 20-25% discount from today’s going rates, I’m thinking that is 2009 prices that I would be paying today. 

If  I put down 30%, I can for sure break even on rental incomes, after tax saving.  Yes, I will buy as much as banks would loan me money.

OC-C, I have no idea what I’ll buy when the time comes.  I’d like a small SFH but I just don’t know how affordable they’ll become or how long the wait will be.  Every year that this bust drags out is another year’s worth of down payment savings.  As the homes get cheaper, my down payment gets larger, and sooner or later my financial picture will intersect with something I’d want to own.
I have to admit that even if housing values come back down to earth, I might still hold-off provided I’m cozy in my rental and the market indicators aren’t showing an imminent recovery.  Until appreciation resumes, there’s little urgency.

I would buy if it’s 30% lower. Even if there’s not a gain in the near future. But the affordability factor for me.

I went to look at some new homes recently, and saw a few with ground-level master bedroom that I really liked.  But they were priced at $900k+ asking.  If the price was to fall to $600k (-33%?), I’d be really tempted to buy one by putting up to 50% down-payment and financing the rest with 15 or 30 year old fixed rate loan.  This is for personal, primary residence.

For investment properties, I’d have to say case-by-case.  Some might be a good buy at 30% below current market price, others might still be way over-priced.

I have an idea, why not buy IE homes at 50% less of Irvine’s now

I think this is a very good question! But it speaks more to a NON-serious buyer. A better question for a serious buyer would be
"If you knew that FOR DEFINITE, prices would go down 30% MAX in 2-4 years MAX , would you buy now?"
This pertains to somebody from another thread that said they bought anyway knowing there would be a price decline. I dont think that person believe for sure that there would be a 30% price decline, maybe a 5-10% decline in their mind.
I truly believe that no matter how many people say they bought because they had to, knowing the above would definitely change their minds. So if they bought, they DO NOT believe in the magnitude of this decline!

NIR - Please excuse my ignorance, but what is an IE home?

IE = Inland Empire = Riverside & parts of San Bernardino Counties.

Nirvinrealtor,
You brought up a good point. If a SFR in Inland Empire is the same or even less in price as compare to a "shoebox" condo in Irvine. Why have not alot of people flock out there? Could it be the commute? Or maybe the hot temperature?
Many have mention the cost per sq. footage. If so, wouldn’t  a purchase of a SFR in the Inland Empire be a better buy? Hence, why dread about the price in lets say OC and head out to the IE?
Or is there more to the "value" of a home than just the "cost  per sq. footage"? Maybe location? Availability of employment? Better schools? Low crime rates?
Here they come ::::ducking::::  =)

reason,

You have touched on the exact reason why housing markets do not exist in a vacuum. When prices fall precipitously in a nearby housing market, people will chose to go there and save the money. The end result is a lowering of property values in the primary market—ours. Irvine is near the top of the market, and it will be among the last to collapse, but the weight of falling prices in nearby markets will eventually drag prices down in Irvine for the very reason you described: why would you live in a small condo in Irvine when you could buy a large SFD in Corona? At some price point differential, people will chose Corona over Irvine. All the surrounding housing markets have a push/pull effect on ours.

Irvinerenter,
You are partially correct. Yes, the nearby market will eventually or not bring down the the primary market, "ours". But here’s where I will disagree. Not everyone including myself will give up my "shoebox" condo for a lesser price SFR out in the IE. Why? because I place more value on factors like: low crime rates; better school; nearby work; etc.
I suppose to each his own. But I will not give up all the afore-mentioned factors just because the sq. footage out in Corona is cheaper. I might add not even Corona is affordable. More like San Bernardino.
An example of someone like myself would be a client of mine. He lives nearby in a SFR with huge yards. But he gave up that for a smaller townhome in Irvine. Why? His reason is he would give up that "big" SFR because Irvine has a low crime rate and better school for his kids.

I read it all the time on this blog. Oh, the sq. footage is too darn expensive. And I somewhat agree. But not totally because there’s more value to a home than just square footage. As I have mentioned.

Let me be alittle more extreme. Why is a small apt in NYC cost over a million? While a huge SFR in Montana cost so little? It’s the old real estate saying….Location, location, location.

And don’t get me wrong. I am all for price correction. I would be the first to hope for a big percentage reduction. But in evaluating the price of houses. Please go beyond than just complaing about the square footage.

typo: complaining

One last thing, I have seen all the number crunching here pointing to the "decline".  And  I must say, I am impress. Although, I am too incompetent to dispute the "numbers". I like to say, there are things in life that are so simple. Yet through the complexity that we create. We might be blinded to see.

"I have an idea, why not buy IE homes at 50% less of Irvine’s now"
 
Because IE homes at 50% of Irvine’s prices are overpriced. The point isn’t that I would buy a home at an absolute price, it is that I would pay the right price for the right home in the right location. $1M for a standard 2000sf home in Irvine is too high. In the same context, $500K for a standard 2000sf home in Riverside is too high. See, that same home at half the price in half the location is still too high, and that’s the point. If I thought a 2000sf home in Irvine SHOULD be $500K, why would I pay that to live in IE? 

reason,

I am like you in that I will not go to Corona or anywhere in the IE for a cheaper home; however, many have, do and will. There is a critical price differential where people make that choice. For instance, imagine you could buy a large SFD in Corona for $1. Would you still chose to live in Irvine? Of course not. For me the cost differential would have to be so great that realistically, it would never happen, but there is some amount of cost savings that would drive me or anyone else out there. If that wasn’t true, the whole IE would be empty right now. People didn’t move out there because coastal living was bad: they moved out there for cheap housing.

People complain about the cost per square foot because it is a convenient comparative measure of cost. Houses are more expensive in Irvine, and they always will be. It is a matter of degree. If houses fall to $120 / SF in Corona, they will drop to $200 / SF in Irvine. Irvine will always command a premium for all the reasons we who live here understand, but this premium is not infinite, and if it becomes too large, people leave Irvine (or don’t enter Irvine) for cheaper housing elsewhere.

People are willing to pay a premium to live in Irvine for better weather, environment, shorter commute to work, etc.

You could buy a house in Lancaster for 1/3rd the price, but I wouldn’t want to live there.  Even if someone offered me $1 million USD cash to live in Lancaster for 10 years, I still wouldn’t accept it.  I’d gladly run the rat race to stay in South OC.

P.S.  If I had to live somewhere as hot as Lancaster, I mind as well move to Boracay in Philippines and run an internet cafe or something.  At least over there I can go for a soak on the nice beach every day.