How low can housing go? Buyers hope a lot

updated 5:03 p.m. ET June 10, 2007

LOS ANGELES - Kurt Montufar isn’t stressing over the housing slump. He’s actually hoping things get worse.

Like many wannabe homebuyers who were priced out of the market during the last boom, Montufar spends time these days scanning real estate ads and news reports to determine if it’s time to take the plunge and buy.

Foreclosures rising? Great. Cash-strapped sellers pressured into lowering prices because they can’t find buyers? Even better.

“Somebody else’s misfortune could be my happy ending,” said Montufar, 27, a resident of suburban Los Angeles.

Indeed, the advantage is shifting to buyers in many previously high-flying housing markets, as homes take longer to sell and prices level off or begin to fall.

Modest annual declines have been seen in cities such as San Diego, Boston, Las Vegas, Phoenix and Honolulu, according to first-quarter data on existing single-family homes compiled by the National Association of Realtors.

Meanwhile, price gains of just 1.4 percent or less were reported in New York, Chicago and Washington, D.C.

Those numbers have left many people trying to “time” the market to take advantage of the slump. But experts said that can be risky because there is little consensus on how long the current doldrums might last.

In addition, the market forces that helped drive the housing boom — affordable financing and the alluring prospect of escalating home values — are no longer a given. Potential price breaks could be wiped out if interest rates rise any higher.

“In general, it is very difficult to time the market,” said Raphael Bostic, associate director of the University of Southern California’s Lusk Center for Real Estate.

“The real problem with that is you don’t know when the floor is until after it’s passed. If the floor is right now, you missed it,” he said.

Montufar, an asset manager and part-time real estate agent, has little choice about waiting for prices to fall further.

He would like to pay about $500,000 for a home in the San Fernando Valley. However, the properties he has been eying are still priced at about $650,000.

“At this point, I’ve got no choice but to wait and see ... how low they get so that it gets to a point where I can afford it,” he said.

Others have already seized opportunities to buy.

Melanie Scalice, 36, a seventh-grade teacher living in the Boston suburb of Arlington, Mass., saved for years for a home. She decided to jump into the market when local housing prices began to dip after years of double-digit percentage increases.

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