Record drop in September home sales

News item from the AP: "Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years."

More: "The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record."

Realtors' take: The NAR reasons that the market is actually stronger than these numbers indicate: "It appears raw inventories are stabilizing, but the housing supply is a bit inflated now because the sales pace does not reflect underlying market conditions – sales were dampened by the mortgage cancellations,” NAR economist Lawrence Yun explained.  “Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up.”

The inventory of unsold existing homes dipped from August to September, from 4.58 million to 4.4 million, the NAR reported.

                Total homes   Existing homes   Existing homes   New homes    New homes
Month      for sale            for sale                 months to sell     for sale              months to sell
Sept. 07 4.95 million      4.40 million        10.5 mo.              529,000 (Aug.)    8.2 mo.
Aug 07    5.11 million      4.58 million         10.0 mo.             529,000                8.2 mo.
Aug 06    4.49 million      3.92 million         7.5 mo.                568,000               6.6 mo.
Aug 05    3.34 million      2.86 million         4.7 mo.                479,000               4.7 mo.
Aug 04    2.88 million      2.48 million         4.6 mo.                404,000               4.2 mo.
Sources: NAR (Existing homes), Commerce Dept. (New homes)

Comments

[Jason M.]

Don't worry homeowners, the NAR economist says that prices will only drop 1.5% over the next year or so. That's not that bad, is it? That guy should be shot, giving people false hope like that. He's only messing with their livelyhood when he says stuff like that. "Just hold on another year, the market will get better come the end of 2008."

Yeah right. While I don't think that we'll wake up one day in the coming months to a 40% price drop, I think we're going to see this "prices decline 2-3% per week" thing for the next few years until we reach what would from today's perspective be a 35% - 40% decline. By then, say the end of 2009, we'll have forgotten all about these predictions of prices falling precipitously. But it will have happened nonetheless.

[Another]

I do not trust the NAR. It seems they are always saying “it’s a good time to buy”.

What about homes in LA priced 3X higher than “reasonable”? $400++/sq-ft for a tract home? That is absurd pricing and foolish for anyone to pay.

[William Jones]

Will the spin never end? If a NAR mouthpiece had been present at the Lincoln Assasination he/she would have proclaimed that it was all a "short term excess of lead in the air, which will be quickly eliminated."

[dav]

More hooch-smoking by the NAR. Guess what? Most of that "pent-up demand" isn't coming back. The restrictions in mortgages aren't temporary blips... they're restructuring of underwriting standards that will likely stick, if not continue to get more strict. And by more strict, I just mean back to normal. Wow, maybe people will be expected to put 20% down when buying a house again. Imagine that!!!

[Giacomo]

Maybe it's just me, but I found David Lereah's double-talk to be more piquant: Mr. Yun is more a bland denial of reality, and lacks depth and subtlety.Though to be fair, I haven't see any of his video, perhaps it works better with costume and make-up.

[longdriver]

Eight Percent? Huh. The NAR does math like the governmet does math.

Sept 2007: 409,000 sales
Sept 2006: 529,000 sales

Lets see by my math that's a drop of TWENTY THREE percent. NOT 8%

Or if we want to compare Sept to August

Sept 2007: 409,000 sales
August 2007: 575,000 sales

That's even worse, now we have a drop of 29%. Where does 8% come from? Did they shake the magic eight ball and ask it what percentage drop they should report?

[ponzi scam in real estate]

We were all victims of the most prolific Ponzi scam since the infamous italian started it. Was initiated by the fed, releasing huge amounts of dollars tor hungry investors and was fueled by an even more avid real estate industry.Somebody up there should pay for this. not the subprime borrower.

[Paul Hiller]

Mr. Yun is wasted in his current position. With Tony Snow retiring I think he would be an excellent White House Press Secretary. He is able to take the most awful news and put a happy spin on it. "sales were dampened by the mortgage cancellations". Those pesky cancellations!
Let me help him with his first White House press conference. "If you don't get out and buy a house today, the terrorists win! Oh, you say you support the troops, but really, what kind of a housing market do you want them to come home to."

Ok, seriously. When are all the reporters doing real estate stories just going to delete him from their Blackberries? He makes marginally more sense than the crack head in the dumpster out back.

[Charlie]

This seems to be a site where all the renters sit around and complain about the high cost of real estate. Get used to it! You obviously missed the boat to home ownership in LA, and have somehow convinced yourselves that housing prices will return to their pre-2000 levels. The reality is that the job market is strong and interest rates are historically low. Housing is tight in Los Angeles and the demand for housing is significantly more than the supply. I am a long-time homeowner and investor in LA and am doing all I can to get my hands on as much real estate as I can because the underlying fundamentals of this market tell me it is an outstanding buying opportunity. I'm just glad buyers are immobilized by the sensationalism of the media and have remained on the sideline.

[Aaron Kramer]

Where's Baghdad Bob when you need a straight talker?

[MyLessThanPrimeBeef]

Ponzi scheme in real estate, this guy says it's Greenspan's fault.

http://www.marketwatch.com/news/story/
capitol-report-roots-credit-crisis/story.aspx?guid=
%7B7920B361%2D26CD%2D4241%2D9797%2
D72E182F13FE6%7D&dist=hplatest

[seattlesnoop]

It's Charlie! Now we know the identity of the NAR's script writer.

[Rob]

Remember those Doctors the Tobacco Industry use to hire to say Nicotine was not addictive? They were on TV ads Newspaper ads, and even in Court. Any of those clowns go to jail for perjury or are they still in hiding in countries their Doctorates were acquired?
Just curious.....

[mike]

when people say they are saving for a home but just can't seem to scrape the down together, do they mean they are living in a nice area and leasing a new bmw and a new range rover every 2 years and eating out 3 nights a week? my wife and i had to drive old outdated roaches and eat chicken thighs(which we bought in 10 pound bulk bags) and rice and frozen spinach.
we now own 4 houses and guess what. we still drive old outdated roaches,eat bulk chicken etc......
if you say the prices are over-inflated and you can't afford a home in l.a. i beg you to back those statements up with your monthly outgoing expenses. affording a house in l.a. is about sacrafice and ignoring what the neighbors think of you. i know first hand how difficult that can be. i live in a fairly nice area. i get wierd looks on saturday morning when i'm trimming rthe hedge and mowing the lawn. and our cars. forget about it. 1987 toyota camry with no hubcaps and 1995 ford taurus wagon.

[joeinlosangeles]

Paul Hiller says:" I am a long-time homeowner and investor in LA and am doing all I can to get my hands on as much real estate as I can because the underlying fundamentals of this market tell me it is an outstanding buying opportunity. I'm just glad buyers are immobilized by the sensationalism of the media and have remained on the sideline."

Actually, Paul, if you truly felt this way and were smart, you would just shut up rather than encourage others to buy. You sound more like a desperate seller. But in any case, I agree the LA underlying fundamentals are good in the long run. If you bought a house today and keep it for 20 years, you'll probably make money. If you bought a house today and keep it for 7 years, maybe not. That of course is the crux of the question: when to buy. You are right that this site is buyer-centric, so people here delight in bad housing news. But you'd have to have your head in the ground or clueless to pretend that what's happening in this site is happening in a vacuum or there isn't a lot of legitimate bad housing news to feed on or that LA real estate has never dropped significantly in value during our lifetimes. But will the market bottom out in 2008 or 2011? If anyone is smart enough to know that, they're wasting their time blogging here. I agree that there's nothing wrong with housing shopping now and making low-ball offers to see what happens.

[aldo818]

Hey Charlie,
You may be right about this board being full of disgruntled renters. I don't know for sure but it looks very possible - and I am one to boot.

However, you seem to be very unaware that homes have dropped in price from $50k to $150k during this year alone. Add that to the fact that loans are harder to get, subprimes have disapeared and that people's incomes really haven't followed with the cost of real estate in southern California.

Some news isn't in the paper but you can see it on the wall.

I personally don't think that the prices will go down to pre-2000 year levels but I think that we will be closer to that level than the levels that we are now. That's just my opinion...

Disgruntled? yeah. Seen real estate bubbles before? yup, that too.

[BottomFisher]

Lawrence Yun explained. “Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up.”

Somebody needs to give this guy a big wedgie fast!

[Steve Reynolds]

"I'ts a great time to buy", "You can never go wrong with owning real estate". NAR loves these sayings, only now do SOME of these NAR people add the second part of this wonderful advice....."as long as you can afford the payments".

[Cal]

Yun:"Because there were fewer transactions at the upper end of the market, there is a downward distortion reflected in a lower national median home price."

For those who think the larger the data set the more accurate median price becomes, Yun just shot that out of the water. Compositional bias, is compositional bias.

[albert]

Home prices are still stable , even if they came down 5-7% , they were overpriced 200% to begin with. I certainly do not see how I will be able to afford a house in LA. 700K for a wooden box which sold for a mere 250k in 2002 , even with the price reduction of 10%.......big deal.

[gman]

Something that's been missed by this blog, possibly due to the fires, is this astonishing accidential posting of 196,000 (up from 13,000 the day before) REOs/forclosures for sale on the Countrywide website yesterday. The list was up for a day and a half (I think) and then quickly taken down.

Is it possible that Countrywide has 196,000 of these and they've just been holding back?

http://countrywide-foreclosures.blogspot.com/

[ProblemWithCaring]

I use to be awed by the sheer gall of their PR, but this is child's play. If spinning is the ability to tweak a positive message out of apparently bad data, I've seen better spin at Science Fairs. NAR's Spinmasters just haven't been the same since the 60 minute special...

A quick trip down Memory Lane:

February News: The national median existing-home price for all housing types fell to $212,800 in February, down 1.3 percent from February 2006 when the median was $215,700.
And NAR says? President Pat Vredevoogd Combs, said the median home price currently is distorted. "Over the last year, we've seen declining sales in many high-cost areas but rising activity in lower cost markets," she said. "This change in the geographic composition of sales means we aren't getting apples-to-apples comparisons in median home prices from a year ago." http://tinyurl.com/3afy93

March news: The New York Post. “The collapse of subprime mortgage giant New Century Financial, which created more than $220 billion in shaky home loans, is growing into one of the biggest bankruptcy tangles ever to hit Wall Street as shocking new claims of insider windfalls and hijacked millions emerge.”
And NAR says? "As home sales moderate, overall home prices will be essentially flat this year," David Lereah, Chief Economist said. "The good news is that inventories remain well below the levels experienced during the last housing downturn in the early 1990s, and supplies are close to balance in many areas." http://tinyurl.com/36z3f7

April news: Existing home sales posted their sharpest drop in 18 years in March as the latest reading on the troubled housing sector came in much weaker than economists had forecast, while some areas see increase in median home values. Some wonder, is this the bottom?
And NAR says? President Pat Vredevoogd Combs, said market conditions are clearly favoring buyers. ‘It’s a good time to buy, in part, because home buyers are not pressured to make quick decisions,’ Combs said. ‘We’re in a window of low interest rates with a plentiful supply homes on the market and flat prices in most areas.’ http://tinyurl.com/39drto

May’s news: The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Foreclosures.com. Home sales continue their downward spiral.
And NAR says? ‘If it weren’t for a favorable economic backdrop, housing would probably have a hard landing,’ said Lawrence Yun, senior economist for the NAR. ‘As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later.’http://tinyurl.com/2vv5y3

[Angela]

Response to Charlie's comments.

It is partically true about his comments. The unemployement rate and interest rate are low currently. But, looking into the fundamentals, that's affordablity ratio. The current ratio is the highest so far. How many people can really afford $500K house in l.a???? US property market is not an unique market. Crisis on property happened in other countries like ASIA. Everyone knows that asia has more poeple, less land and less mobility than u.s. indeed. But, look in the Japan, Hong Kong Market, when the bubble was exploded, for example, Japan, they needed to pay their mortage by 100 years, they called 3-generation mortgages, they took over 10 years to slightly recover the market. Bear in mind that their real interest rate was "zero"for many many years. But, the market is still dead. It is because affordabiltiy. HK market, Hk is famous country that it has little land but lots of people, strong economy. But, when the price goes up too much, who can afford... not all people in the market like you, Charlie, "investor". If majority of people "missed" the boat, who buy your properties. For a healthy market, could it only be supported by a small % "investor". Be realistic!! this is called market force.

FYI, when one market is done, they will have chain effect on other area. The low interest rate and low unemployment rate are the area haven't been affected.

If i were you , I "SELL"!!!!

[Mousebender]

Longdriver has the true story.

(Reposting a comment from Curbed LA)

See data from NAR: http://www.realtor.org/Research.nsf/Pages/EHSdata
See data in PDF here: http://www.realtor.org/Research.nsf/files/
EHSreport.pdf/$FILE/EHSreport.pdf

The 8.0% decline is just the seasonally-adjusted month-on-month decline from August 2007 to September 2007. Without the data massaging, this was a 28.9% decline month-on-month. In the West, it was a 33.3% decline.

Non-seasonally adjusted year-on-year change: -19.1% nationwide, -27.8% for the West.

The first open question is how much of this was normal seasonal effects. Even so, the seasonally adjusted year-on-year change: -19.1% nationwide, -27.8% for the West.

The second open question is how much of this was due to the changes in the subprime and jumbo mortgage markets. Even so, subprime and jumbo money is still out there--the question is who can qualify, and what are current rates compared to those of the past.

[Inland Empire]

Charlie says "This seems to be a site where all the renters sit around and complain about the high cost of real estate."

There seem to be alot of people on this site who are convinced that RE is going to drop in price dramatically. Some think 40%. My question is, how many renters who wish to buy are preparing? Are you saving that down payment? Paying off bills? Upping your credit score? Learning about the escrow process? Watching your target area? Prequalifying for a loan? Learning repair or remodeling techniques so you can turn a frog property into a beauty?
My guess is that few would-be buyers will be ready if there were such a dramatic drop. There will be some other set of excuses for not owning a house.

[formerlahomeowner]

Charlie,

This site is for disenfranchised renters. Why would a real estate tycoon like yourself even bother to post a comment is beyond reason. Go ahead and buy ten more houses right now. That should stop the bubble from popping.

[Cal]

I'd like to argue with the fact that I am disgruntled. As a matter of fact I cant remember myself so gruntled in all my life.

[Pete Viles]

Personally I am fully gruntled. In fact, if I were any more gruntled, I'd be overgruntled, and in danger of forming a gruntle bubble.

[Dog-Walker]

Charlie,

Say the fundamentals of the LA enonomy ARE good, that doesn't mean the fundamentals of the housing market are good.

Take a rental property near me (Hollywood): 1930's building; two 1BR units and one 3BR unit; potential gross income based on very optimistic neighborhood comparisons, $84K per anum; asking price, $1.6M. If you pay cash, you have opportunity cost; if you borrow, you have loan costs. Based on a loan at 6.75% + rough tax estimate and without any other costs, you're looking at costs of $144K per anum. That's $60K of red ink (And if you take the historical performance of alternative investments, the opportunity cost on your own $$ should be more.) The only way this makes business sense is if you assume continuing price appreciation in the teeth of historically low affordability and following five years of 20% growth. This sounds a lot like the pre-crash reasoning about dotcom valuations in 2000 to me. I'm renting, but I have plenty of $$ to put down if I can be convinced it makes sense. Convince me.

And when you do, take Mike into account.

Mike, your argument has a flaw: it proves that prices are crazy high. What sane person would make those kind of sacrifices unless they expected prices to continue going crazy? And if they're already that high right now, what will future buyers have to forego to drive them higher?

[seattlesnoop]

By the way, Charlie...I am not a renter, haven't been a renter for over 20 years. I don't know why you get the impression that the only bloggers here are renters. Relax and enjoy the differences of opinion from both owners and renters.

[John]

Yun has ZERO credibility. Everything that he spews is crap (period). Now I just laugh when I see one of his “statements” coming. When I’m reading a RE article, I can almost anticipate when Yun will appear around the corner. You’d barely know there was a RE downturn from reading the LA Times, however. A terrible source for accurate RE information, sad to say.

Having spent a good year looking all around LA for a decent and affordable house and ultimately deciding to continue renting (this was in 2004) I certainly gained an excellent perspective on the whole RE situation. I’m sure many here did as well.

Considering the last year, I also feel completely vindicated for waiting... as opposed to all the bandwagoneers who were bending over backwards (and forwards) to out bid each other over houses that had more than doubled in so called "value" within the previous 3-4 years. Good for you if you flipped and ran. To f-n bad if you’re stuck.

Were the thousands and thousands of newly arrived immigrant families without credit history or proof of income going to turn down a basically "free" house? Were the investor/flippers going to? Who cares if you need to bid up the price another 25K or 50K, we’re not putting anything down anyway. Yippee!

Not to mention the mega developers who hired the immigrant labor to minimize their costs and increase their margins 10-fold under the watchful eyes of… who? Oh, that’s right, everyone’s shocked from 911 and watching the FEAR and CONSUMPTION channel(s).

Oh, gee… said the appraiser, the comps went up 25k last month, and the month before, and the month before… gosh is this $250K, 2-bed bungalow really worth $550K now? Sure it is, because Chumpy Van Winklehousen will pay for it (or should I say, sign the lease for it) and because if it isn’t, CountryWank won’t use my excellent appraisal services anymore.

Oh my… said the RE agent, the prices are going up so quickly, this will be my best year ever! A brief “moral” thought… is it wrong to collude with the other agent and leverage the parties against each other to drive the price up even further? … and the thought was gone.

Spread this out over thousands of communities and over 6 year’s time.

Watching the artificial build up of demand and subsequent price hikes in Cali was sickening. Fundamentals my hairy you know what.

The fact that all manner of supposedly credible financial institutions could print up unlimited junk paper and have it backed up by the corrupted rating agencies (never biting the hand that feeds) sold around the world in mixed bags with continued schlepping on the street by the severely under-regulated mortgage companies was CRIMINAL. But they’re laughing there way to the bank... ain’t that right Mozilo.

[N_C]

I get the impression that the investor-types don't have a lot of sympathy for those that don't own a home right now. That really comes across harshly to young professionals like myself. I am 24 years old. If housing prices don't fall about 30% or so my husband and I don't have a hope of buying a house in California. We could have enough income to buy a condo but it would eat up more than 50% of our income. I want to own a home, not have a home own us.

Other young couples and families have been driven out of this area because of the high home prices. The local school district that they closed down an elementary schools due to declining enrollment. Is this happening anywhere else in Los Angeles?

PS: Dog-walker, you always make so much sense to me. I enjoy reading your comments. :)

[BetterVillage]

If the gruntles can be suaded to combobulate themselves please. The cooler heads have been reduced to feverish fuddledom (myself cluded).

Anyone notice the ad for Donald Trump's horse and pony show at the top right of the blog for the last few days? Saw him on Larry King a couple of nights ago and he was telling everyone with a very straight face that it's time to buy people! I can understand that he has an interest in saying that. What I can't figure out is why the audience didn't laugh. If I remember 'rectly he was also encouraging people to go out and buy income properties.

Here's are some links to the secret training facility used by NAR and purveyors of fine statistics:

http://www.youtube.com/watch?v=Bfq5kju627c

http://www.youtube.com/watch?v=pUmVe9qnw7E

http://www.youtube.com/watch?v=US12todDdCE&NR=1

[shockg]

Angry renters and market timers, get a grip. Charlie is right. You missed the boat so move on. Happy dooms day.

[longdriver]

Don't worry N_C some of us here are old enough to remember the early 90's crash. The EXACT same comments were made back then. This area or that area was immune, prices will take off again next year, buy now or be priced out forever. Well, guess what, eventually every area saw big declines. It took 32 or 4 years but prices came down 30% to 40% in most areas. That runup in prices was nothing like this one. Of course all the bulls like to blame the last one on the defense industry cutbacks. Up north they blame it on the earthquake, in Texas they blame it on the S&L crisis. I'm in the defense industry and many of my friends lost jobs back then. What's not talked about is that most of them quickly found other jobs. Most of the people I know that lost homes back then were in construction, not aerospace or defense. The point is it was a BUBBLE and just like this one, it popped. By the way, I am an owner, not a renter. I bought in 88 saw my home value nearly double and then crash back down to pre bubble level. I fully expect my current home to fall back to pre-bubble levels. Now whether that will be 2001, 2002, 2003 or 1998 values is anyones guess. How long it will take is also anyones guess.

[Cal]

Just for completeness, the CAR release:

http://www.car.org/index.php?id=Mzc5MTY=

"Closed escrow sales of existing, single-family detached homes in California totaled 271,590 in September at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 38.9 percent from the 444,780 sales pace recorded in September 2006."

"C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2007 was 16.6 months, compared with 6.4 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. "

xoxo,
Cal "G.R." (if realtors can have fancy designations after there name, so can I. I took an online class and became an official Gruntled Renter)

[joeinlosangeles]

longdriver: Don't worry N_C some of us here are old enough to remember the early 90's crash. The EXACT same comments were made back then. This area or that area was immune, prices will take off again next year, buy now or be priced out forever.

You have to remember everyone who makes a comment has some vested self-interest. Would be buyers are cheering for prices to drop. Would be sellers, and property owners, hate the idea that their paper profits are shrinking. I find this site useful primary because it gives me a snapshot of the thinking on the extremes. I wonder how much effect the blogsophere will have, if any, on housing prices, since in the earlier downturn there wasn't really a way for buyers/sellers to share info with each other like there is now and gain access to info.

If you are looking to buy or sell, I think the key is to continually gather info and develop a strategy/philosophy about your approach. Personally, I am intensely tracking a number of areas where I am seeing good buy opportunities developing. Now, whether that opportunity will be in six months or 24 months, I don't know. At the moment, it's nearly impossible to gauge market value because so few properties are moving to provide a sense of current comps. I have been tempted to make offers on some places that were 25% below their purchase price 12-18 months ago (My thought was to offer 20% below the asking price (or 45% off their 12-18 month ago price), and shrug and walk away if they declined or made a counteroffer). But my sense is to wait a bit, and let the sellers have more weeks or months of inactivities. With the extent of the inventory on the market, I really don't care about losing any particular property.

[tag]

"How many people can really afford $500K house in l.a????"

A hell of a lot of people can. I work in the film/tv biz and most people I know make well over $100k a year. $500k is a bargain for a house in LA. Damn, if ONLY houses were really that cheap. If a nice 2 bed/1 bath 1200 sq ft house in Silverlake/Los Feliz/Eagle Rock/Atwater/Echo Park would drop down to $500k, you'd see the same old muliple offer hysteria we got used to over the last 7 years.

there's no doubt that prices are going down. But, EVERYONE I know wants to buy a house and there's just not enough of them to go around.

[Doug Willis]

The reason for the drop in inventory levels probably has to do with people taking their home off of the market, since it did not sell in the Summer selling season. Based upon what I am seeing the sales results for October will not be any better and will not get better as we head into the holiday season.

There is no pent up demand as interest rates are very favorable. Demand was created by two factors 1) teaser rates and 2) credit for everyone. These factors cease to exist. A rise in home prices is not likely with an increase in REO's and an ever increasing supply of short sales.

[ProblemWithCaring]

"there's no doubt that prices are going down. But, EVERYONE I know wants to buy a house and there's just not enough of them to go around.'
Posted by: tag

I think tag is right. There *are* enough houses, just not enough houses valued correctly. There is something like 59K homes for sale in LA County. His wealthy friends, your wealthy friends, my wealthy friends - they could all start buying them anytime they wanted.

However, at this point, rational working class people - who don't want to live in a Red Zone - probably want to buy houses in LA, at prices that bear some resemblance to the fundamental value of their location. With a 17 month supply statewide, I am guessing that current home prices clearly aint it.

[Kim]

You folks in LA might not realize it but you live in a rabbit hole. If you think you can rely on the housing market to act normally - i.e. bottom out then correct itself - then you're freaking crazy.

When it the madness starts back up it will be even worse. Housing prices will go higher than they were before the bust. These fires are going to impact the market too.

If I were so inclined to live in that madhouse you call LA I would be buying right this very minute because. The market is just poised to come back and when it does it will be the real estate equivelent of one of those creatures in Alien.

In LA no one will hear you scream.

Enjoy riding that rocket folks.

[Don]

Inland Empire: This renter, at least, is preparing to be able to buy a house at some point in the future. How far in the future is an open question.Using linear forecasting (which effectively ignores the power of interest compounding, increase in income or decline in real estate values), it looks like my wife and I will reach our savings goal in 2013. But the slope of the line on the savings forecast gets steeper each month while the slope of the line on the goal forecast gets shallower each month. At the moment the only debt we have is my student loan from grad school. We're buying a car, but it'll be on a 4-year loan at 5.75% which we'll likely pay off before we buy a house (similarly with the student loan). I can't imagine that we're the only people smart enough to plan ahead.

[aldo818]

Hey tag,
I agree that there are a lot of people that make $100k and more a year.

However, while you and your friends are lighting your cigars with $100 bills, the majority of LA county residents are making closer to $60k/year per household.
Now, consider that number and the fact that the median income per household has only gone up by about $6,000 in 15 years. It doesn't exactly match the the growth in housing costs, right? This is where I see the big disconnect.

I don't think that anyone here is saying that everyone will afford a house with this drop. Were are simply pointing out how the fundamentals of affordability are out of whack. I mean, really, how many people do you know bought in a panic because they thought prices will go up 25% every year until the end of time?

[Inland Empire]

Don said, "can't imagine that we're the only people smart enough to plan ahead."

Probably not the only ones but members of a small group! Good for you.