macrocephalopod

1. This is not financial advice. It probably depends what you believe the driver of that drop will be from. Economic decline? Rising interest rates? If the latter, you might be interested in this: http://www.convexitymaven.com/wp-content/uploads/2021/06/convexity-maven-fire-insurance.pdf …

I’d also consider looking at all this from the perspective of “human capital” and “investment capital.” Depending upon your job, your human capital may look like a massive, long-dated corporate bond. So it might make sense, when all put together, to take some leverage risk.

I’m sure @EconomPic has some interesting thoughts on this topic as well.

CA is a state you’re allowed to walk away... that takes care of the worst case (though you lose your 10% down). But the price doesn’t matter to solvency as long as you can afford to pay... in fact, many scenarios where ability to pay may improve even if the value is down.

That too... though I’m personally pretty anti buying real estate you don’t plan to own for at least 10+ years and can’t see yourself staying in 20+ years unless it’s a small amount of your net worth.