L.A. home prices dropped 13.7% in '07

Home prices in Los Angeles lost 13.7% in 2007, and were declining at an accelerating pace at the end of the year, according to Standard & Poor's Case-Shiller home price index.  The report also points to a regional housing bust -- the American cities with the nation's most severe price declines in November and December of 2007 were concentrated in the West and Southwest.

From LATimes.com: "The Los Angeles-area home price index, which includes Orange County, is now 15% below its peak, which Case-Shiller says occurred in September 2006. Various economists have predicted that Los Angeles-area home prices will decline 20% to 30% from their peak level."

Headlines, highlights, lowlights:

--The Case-Shiller index for Los Angeles fell 3.1% from November to December, and declined 13.7% over the course of the year.

--As measured by Case-Shiller, Los Angeles still has the nation's largest housing bubble. For those who don't believe there was a housing bubble, you would say that Los Angeles is holding on to more price appreciation than any other American housing market.

--The cities with the largest price drops from November 2007 to December 2007 are concentrated in the West, suggesting the possibility of a regional recession similar to the one that followed the S&L bust:

1) Phoenix (-3.5%)
2) San Diego (-3.4%)
3) San Francisco (-3.25%)
4) Los Angeles (-3.1%)
5) Las Vegas (-2.9%)

The Case-Shiller index is considered among the most accurate measures of home values over time. Unlike other sales reports, which rely on overall market activity, the Case-Shiller index is built out of "matched pairs" -- instances in which the same house sold twice over a period of time.

Thoughs? Comments? E-mail story tips to peter.viles@latimes.com.

Comments

[Dr. JwB]

TPWC . . . nice job!

For some reason it reminded me of the "Four Yorkshiremen" sketch, which is LA Land appropriate, I think:

http://tinyurl.com/cdhw

[looking]

Mark,

I agree some areas (palmdale, fontucky, etc) will drop in price. However, my point is that the good areas (Bev Hills, Westside, Malibu, beach areas, La Canada, San Marino, South Pass, some areas of Pasadena) will not see the drop in price that many hope to see. If you are going rebut please quote correctly, I said 50-60% drops, as an opinion, will not occur. Do some research before you call names.

I only pointed out one simple recent example, however, there are many others out there of market price bidding. Not over bidding. I guess the whole point is that a property's value is what a person will pay for them and not an arbitrary drop in priced wished upon by doomsayers.

[Laker]

looking, these buyers in Pasadena are overpaying. There are many people that can buy now but choose not to.
But there definitely not enough to buy all inventory.
Those 30 buyers are bidding on 300 properties....
Check the median income on that street and multiple by 4 (I'm generous...) that is how much this house is worth after bubble fully deflates!
I don't know the area well, but if the median income on that street is $300,000 so yes, price should be in the Million range...I just have a feeling that the income there is more like $70,000-80,000.....

[zenlolly]

Boy, this blog is about two years behind everyone else. People are still arguing about whether it's a good time to buy or not? Most other blogs have been so overwhelmed with the evidence and rational that now is not an even remotely good time to buy, they have all but shut down, and have moved on. I would strongly urge anyone who is thinking of buying now, do your due diligence and embrace the facts. Any realtors hoping against hope ...hunker down, resistance is futile, you will be assimilated. We are the BORG! (Bashers of Real Estate Greed)

[zenlolly]

Prices will have come down at different rates for different areas. So 15% for LA is going to be a little misleading. Some Inland Empire areas will have come down much more than this, while more expensive areas, will have seen less depreciation. Lower tier housing was the target for sub prime lending and appreciated much more in value than the higher tier, which is made up of more conventional mortgages. Naturally, the lower tiers are seeing the fastest falls. The next wave of resets is said to be in the second half of this year (2008), and it is estimated will be more severe than the one we have just seen. In 2009, some reports suggest Option ARMs, and even Alt-A mortgages will bite and impact prices negatively in more affluent areas. Best estimates are for a bottoming out in 2010, although Robert Shiller (Case Shiller Index) suggested that 2012 is likely for some areas.

[MyLessThanPrimeBeef]

Who cares if all other blogs have 'all but shut down.'

This is a public service...and with tolerance for opposing views, despite indignant protests howling otherwise.

Who cares if others have moved on?

The mentality that we must always something new is what got us into this mess in the first place. Excuse us if we want to be dull and keep going over the same lessons the Romans should have taught us.

So, who cares if we are two years behind. It might just as well be 2000 years behind for all we care. You go chase the latest 2008 trends. Keep seeking that 'financial innovations' while I reach for my mattress. Keep worshiping technology and leave me alone with my Aurignacian stone-axe. Go ahead, have your Visa and Mastercard and Iwill cling to my gold and cowrie shells.

Human nature never changes. It is here today still what it was in Sodom and Gomorrah, in Rome and in Holland.

[zenlolly]

MyLessThanPrimeBeef, my opening post was rhetorical, as no doubt was your response to it. I see you presume to speak for everyone when you declare emphatically "who cares!" Well I beg to differ my friend, there are quite lot people who do care. It is precisely carelessness that has lead us into this "mess" as you so aptly described it, and not the "mentality that we must always [sic] something new", that you then rather inarticulately describe. A better informed person makes better choices, whether he be a Roman, Saxon, Jute or Trekkie :)