These rates are the only reason rental parity even exist in certain OC cities. So if you have the down payment, even with the downward market pressure, buying now in certain areas actually can make sense. This hasn't been seen in a long time.
wow - didnt think i would read those kinds of words from you Indie. what areas do you have in mind?
Yeah I know I'm sort of seen as a perma bear on this forum, but that's simply not the case. If I was I would not have just closed on a home in CDM.
That being said, I'm not saying there are great deals out there right now, because with the exception of short sale fraud, or a unicorn, the deals out there aren't great. There are some homes on the market that are simply priced fair when you compare the alternative (renting). I'd say USCTrojan's list makes the cut, I'd also add north and south Laguna Niguel, non-coastal areas of Dana Point, Foothill Ranch, and even some parts of Irvine (older Irvine). Ladera Ranch is getting close, but when you figure in their tax rate, MR, and HOA, Ladera has another 5% to go before it starts looking better. Mission Viejo is still too bubbly for some reason when compared to rents but even in that city there are communities at rental parity.
Places not their yet, but could be there in the next 12-24 months, just off the top of my head: Columbus Grove, Tustin Fields, any of the Woodbury communities, Quail Hill, Northpark, Northwood, and Tustin Ranch. If you are planning to buy in those communities, I'd say a solid no for right now.
Still there are some pie-in-the-sky knife catchers that put their homes on the market and sit for 6 months because they still think it's 2007, just let those guys sit, their homes will be REO inventory in 2013-2014.
The market is becoming more friendly towards buyers. I wouldn't say we've turned the corner yet, because if not for these artificially low rates rental parity would not exist.
So if you're buying simply for a place to live and not trying to build a profit driven rental empire, now isn't a horrible time, it might not be the best time, but it's not going to destroy you financially as long as your are realistic about what you can afford, and have the down payment (and reserves).