One L.A. Times Writer's Real Estate Crystal Ball

Let's face it, even a few years ago it wasn't hard to predict the current housing downturn. My fear, way back even when we bought our home in 2004: That once all the crazy, short-term (think three-year, low rate ARMs) readjusted, there would be a lot of people who suddenly couldn't afford their home -- and a glut of foreclosures would drag down the market.

That's why in 2005, when the market was still exuberant, I switched my 7-year ARM to a 30-year fixed mortgage -- despite a higher rate.

The idea, of course, would be to refinance or sell when that ARM was up. That made sense in 2005. But at the same time, I had this sneaking suspicion that home values were going to potentially drop by the time the ARM was up, while 30-year rates would be higher -- and not only would we be stuck in our house, but the value would be lower, and we'd be forced to accept a 7 or 8 percent loan.

L.A. Times writer Peter Hong had that same sneaking suspicion back in 2005 -- but he went much more extreme, and sold his house (for a hefty profit). Now, in a recent piece, Hong explains how all of his friends now see him as some sage of the real estate marketplace:

Our friends said we were crazy. Relatives asked whether we were in financial trouble. But in April 2005, my wife and I bailed out of the American dream. We sold our two-bedroom Pasadena condominium and became renters again.

We got nearly three times what we had paid for the place nine years earlier. It seemed to us like a staggering profit -- and a sign that the market had been pumped up beyond reason.

That's why we decided to rent instead of buying another house right away. We wanted a place with a yard and a third bedroom, but we weren't willing to pay the sky-high price or take out an exotic mortgage to buy something our income did not justify.

So our plan was to take our profit and wait for prices to return to Earth. The madness had to end, we thought.

For a while, we wondered whether we would prove to be the crazy ones as home values in Southern California overall continued rising through last spring. But a closer inspection of real estate sales data shows that signs of trouble were already appearing when we sold.

Hong talks to some experts, who say that what he did isn't for everybody -- and even Hong admits he's not so sure when he'll be able to jump back into the market. He wants to do it, however, before his 8 year-old daughter is too old to appreciate it.