I live in a high cost of living area. I have not yet reached this conclusion, but for the sake of this discussion suppose I would like to buy a house here at some point in the next 10 years, but that I am fairly flexible on exactly when I buy it within that period. I would ideally like to wait until the housing market, which is currently extremely expensive and has been increasing around 10% a year for quite a long time, drops significantly. My question is, how should I prepare to be in a position to take advantage of a big drop in the housing market, given that I have no idea when it will happen?
My main dilemma comes from the fact that I would need to have a significant down-payment - I guess it would be on the order of 100k even after a big drop in the housing market. Currently almost all of my savings are invested, and if there was a big drop in the housing market I would expect a similar drop in the stock market, making it far from optimal to sell 100k worth of stock for a house down-payment. I could alternatively just stop putting money into the stock market in taxable accounts during the downturn until I have the 100k for a down-payment, but then I would be missing out on buying stock for cheap, and maybe the downturn would not last long enough for me to save up the 100k (it would take me around a year). Lastly, I could just keep 100k out of the market at all times, but then I would be losing out on the potential gains on that money for up to 10 years - which seems like the worst option.
All of this assumes that I would keep my job in a downturn, which is a pretty big assumption, but lets just assume I don't get let go for simplicity.