How Does One Recover?
Calculated Risk is report on the declining market in Southern Califormia. So sales are down 44% and price is back to levels of 3 years earlier...
Say you were the one entering the market at the high and found yourself 17.8% down, an average of $80k.
I worked it out once that every extra dollar I was paying back today saved me a dollar of interest in the future, I did that by doing an amortization schedule and keeping the payment the same and taking off a lump sum and then seeing how much less interest I'd pay. This varies with length of the loan and interest rate, but I suppose it is a rule of thumb that I use, so chance are that $160k will have to be paid to pay back the extra $80k.
I've been $40k under in my home investment and it sure didn't feel good, and that was a lot of lifestyle denied, but $80k down in under a year?
So, median price there is still $415k. How much lower does it go?
Calculated Risk has another reference showing prices back to levels 4 years ago... You so don't expect to be under 4 years after owning your home, but then, I was after 5-6 years of owning a place. Consider the time value of the money and it is under.