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When I was chatting with local mortgage broker Brian Brady for this story, he had this characterization of the housing market: “The market is going through a thing we call price discovery, which is ‘What’s the right price to pay for the house?’”

He values property in two ways. One is what he calls “intrinsic value,” or the way a purchase pencils out based on a 20 percent down-payment and a traditional 30-year fixed mortgage. When house prices get to a place when those factors are enticing, “investors come in off the sidelines,” he said. He estimated in November prices have about 20 percent to fall to get to that point.

But the other value is what Brady calls “utilitarian value,” which adds about $40,000 or $50,000 to what an investor might pay for a house to what a homeowner might be willing to pay.

“That’s the, ‘How much will I pay to paint my walls lime green?’” he said wryly, adding some of the reasons people choose to buy instead of rent. “There’s the homeownership value that people love, the permanency, the ‘this is my house’ thing.”

How much more than an investor’s cold “pencil-out” scenario are you — or do you think buyers in San Diego are — willing to pay to own their homes? Send me an e-mail with your thoughts.

KELLY BENNETT

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