Timing the market to buy at the right time

When it comes to buying real estate, everyone wants to buy at the right time.  No one wants to buy and then have their investment depreciate in value.  Timing the market to buy at the perfect time (buying when property values are at an all-time low) is difficult as we cannot predict the future/economic events to come, that may negatively affect property values.  Currently, we're at a point where property values have declined by as much as 40-50% in some areas and it's beginning to seem like the worst, for the most part, is past us now. It's not for sure that prices will come down anymore then they already have, anything is possible, but if you're thinking about buying a house now, you're not putting yourself in a worse position than you could have if you bought between 2005-2009.  It's typical for the market to have micro fluctuations, or small ups and downs, after a heavy decline, ultimately leading to more steady or lengthy increases.  If you look at any Case Shiller Index you'll find this.

If you're buying a house in a good area and planning to live in it, or just hang on to it as investment, for at least 10 years, you should be OK.  If you did buy between 2005-2009 in any good area on the Mid Peninsula... let's say Redwood Shores, the appreciation on your investment should come back around.  Take the sales history of a randomly selected 2 story single family home in the Marlin Park neighborhood of Redwood Shores as an example:

Sold for $106,000 in 1978

Assessed for more than $200,000 in 1988

Assessed for more than $400,000 in 1998

Sold for $1,125,000 in 2006

Assessed for more than $1,000,000 in 2008

From this information we're able to establish that the new buyer did not buy at precisely the perfect time.  As a matter of fact, they may have bought at the worst possible time.  Their investment is now worth about 11% less than how much they bought it for.  But are they in trouble?  I don't think so.

Let's assume their intent in purchasing the property was to own the home for 10 years, sell it, move out of the area, and retire.  Assuming the assessed values above are accurate, which I feel are fairly conservative, every 10 years since 1978 this property has appreciated anywhere from 47-60%.  Let's say the value of this property will only appreciate by 25% (conservative compared to historic rate of appreciation) in the 10 year span of when the property was purchased in 2006 -- this means the investor bought for $1,125,000 and sold for $1,500,000.   This doesn't seem that bad for buying at one of the worst times possible.

To sum it all up, it doesn't seem like a bad time to buy Real Estate (in the San Francisco Bay Area) if you're going to keep it for another 5-10 years.  Nothing is guaranteed as the past shows us there has been severe declines in the Real Estate market and property values have always resurfaced.