LA Land Poll: How low will listing prices go?

Commenter El Guapo, your request is my command. You asked for a poll question in which readers could predict median listing prices -- as measured by Housing Tracker -- at the end of 2008. Predict away. Feel free to use the comment section to record your prediction for the record.

Opinion Polls & Market Research

Bloggers' note: My apologies, I threw out the first 50 votes and rebuilt this poll using new software. The previous version was confusing.

Comments

[Outpriced in SFV]

I think it's got to get within the reasonable range for purchase. My fiance and I have a combined income of 130K and still can't buy a condo?! My family in Texas think we're crazy for wanting to spend 400K on a "box" as it is.

I chose between 410K to 439K range because looking around, I don't think that current prices are sustainable especially with the tightening of lending!

[l.a.guy]

Well according to my previously posted price theory, if the median home price in July 2002 was $266,000 (also the last time the median income could purchase the median priced house for about 35% of gross salary) then allowing for 5% annual appreciation, the "sensible" price point for the median house at the end of 2008 would be around $356,000. However I don't see that happening, people will have to be dragged kicking and screaming back to those levels so it's going to take more than 10 months to hit bottom. I think $440-469 is the likely range by the end of this year.

[El Guapo]

How cool, ask and ye shall receive! I'm sticking with $375K...

[Roger Moore]

I said "sharply lower". I doubt that we're going to have a complete crash, but I can't see prices this year sliding any slower than they have over the past 6-8 months.

That said, I think that Peter should be sure to re-print this post at the end of the year, so that those of us who put our predictions on the record can see how we did.

[MyLessThanPrimeBeef]

Are we talking about nominal prices or adjusted for inflation?

[formerlahomeowner]

The current median listing price is $470K. I selected sharply lower ($380K-$410K) because sellers will finally come to realize that real estate is going down hard but will still be in partial denial that they will keep on hanging to their wishing list prices. "I WILL NOT GIVE THIS HOUSE AWAY. DAMN IT."

[GDC]

I voted sharply lower because the only houses that will sell are foreclosures related to the subprime loans and the low end areas. If sellers are still in denial in the mid to high end homes, the numbers will be tilted toward the low end and the median could look very ugly by the end of the year.

[1]

According to the interactive chart Peter posted earlier:

http://www.latimes.com/business/
la-medianhomesales-chart,0,3900278.htmlstory

The highest median price in 2002 was $282k, and the highest in 2003 was $340k.

I think we are heading back to the $300k level. That is 40.6% off the bubble peak of $505k and 36% lower than the $470k median today.

LA hasn’t even begun to see the real price corrections yet.

[Laker]

I selected the below $380,000. Since we are dropping abou $5,000 per month at an accelerating pace, the current $470,000 will drop more than $50,000. The $420,000 is the absolute top, keep in mind that December is a very slow month because of holidays. December 2008 will be very bad as we will be in the midst of a recession so all the holiday shopping will be down big time. That is why more capitulation will happen and therefore it seems safe to assume a median asking price of $380,000.
Median price of house sold will actually be lower than that...

l.a.guy, I somewhat agree with your price theory. However, i think prices started the crazy up tick when the dot com bubble had burst - that is in 2001. So my starting point is 2001 and ultimately the end point too,.
(I think we can have a poll for what will Lefty say we should do at end of 2008....100% = "Buy now metro LA"

[Goodness Gracious]

Not a lot of motivated people out there, therefore with a years worth of inventory, prices will come down.

If folks get motivated, many can't buy even if they want to. Liquidity problem is still with us. Jumo loans are about 6.5% per bubbleinfo.com blog by a San Diego realtor.

I am not praying that prices will crash. If they do I prob will not want to move back to Calif b/c governments will have a lot less tax revenues. More services will be cut, school funding will be slashed, road work will be delayed, the LA Times may have to fire Peter to save money.

I live in Colorado and am happy here. But, I would like to finish out my career in Calif and possibly retire there. I'm somewhat interested in moving back but I would like to move back when the home that curently is listed for $1.2MM will be listed for $950K in 14 to 18 months. If Lefty is right, which seems almost laughable, then I will stay in Colorado.

[Leah]

I don't think we have even come close to seeing bottom in housing market. Some people will need to get out for financial reasons and take lower offers...

[mbob]

Everyone can go rent "They Shoot Horses, Don't They?" for a little context.

Red gave the performance of his lifetime.

Jane wasn't too shabby, either.

Almost everyone who remembers the dirty thirties is dead. Time for a rerun.

[John]

Prices will fall until the median household can own a home comfortably on a standard mortgage. Maybe not a median-priced home, but at least a decent starter place or a condo.

Compare the median home price in some of the most crime-ridden neighborhoods in L.A. (Compton, Watts, Cudahy, etc.) to the median income of those neighborhoods, and then tell me we don't have a long way to fall.

Hopefully I'll still be employed by the time things hit bottom.

[Jason Hoppe]

Is Lefty the 2.1% in favor of it rising? :o)

[perks]

I say "sharply lower" as of the end of 2008, but the bottom of the market won't hit until "way lower" in 2009 or beyond.

[Mike S]

HEY EVERYONE, heard about something called an interest rate???

Median/mean/mode--pick one--falls off the map in 2 years when the inflation bill really arrives. Greenspan doesn't kid when he points to a 10% or 12% mortgage interest rate in 2010-2012. Doesn't matter who gets elected, the die is already cast and current Federal efforts like a 'hocus pocus' tax rebate only make the matter worse.

Think things are bad now, study Houston Texas in the late-70's/early 80's and their home prices when an overbuilt area encountered high(er) mortgage rates.

Peter, remember this post. It is very sad, but it's going to be a hell of a price paid for waiting until after the party to remove the punchbowl. Perhaps more Lefty's will blog in and find some bright side in this worsening storm.

Mike S.

[smi2le]

The median selling price for a home in Southern California will be slightly higher than twice the median houshold income for Southern California. That is the historic sustainable price of housing in the U.S.

[vultur]

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Hogwash. The 30-year fixed mortgage rate won't rise above 7% again in your lifetime.

Median sales prices will probably bottom out somewhere around $400k in the Year 2010.

[producer 08]

Unless our 50k a year salaries come up to the 250k a year range I think the prices are going to dive down to 100-200k for a house in LA maybe lower when trillions are lost in value from all of the suckers that paid over 400% for their homes during the housing boom

I also predict that prices will not stablize until 2011

[Jeff]

Given the bearish tilt of the readers of this poll (myself included) it would be interesting to retry this poll with a more general population of the L.A. area.

Try putting this on the front page of the Times and see what the result is then.

Although the everyday reader may not be as knowledgeable as those following the market, the herd mentality is a powerful force.

[ray]

$470k on a house is a prohibitive entry price, given the 20% down I encountered trying to finance that price. Who has $94k to make a down payment?! Forget about trying to get a 2nd mortgage to finance that down.

It'll take about 2 to 3 years to save $97k for a down payment. This housing slump will be last a long, long time.

[xtine]

What this says, more than anything, is that people won't buy until they think they're getting the best price. If 37% of the people think prices will go to 300K--it becomes a self-fulfilling prophecy.

[Chris]

Merrill Lynch and Goldman Sachs are both saying it should come down to 365K before bottoming out.

[melissa]

You guys are crazy! Prices can't fall to the levels you predict-- not until surrounding states such as Nevada, Arizona, and other desirable West coast cities such as Seattle reach a median price of $200,000, which is not going to happen.

If you want to pay $365 or $400, move to one of these wayward neighbors and say goodbye to the SoCal lifestyle. There is a price to pay for the sunshine, beach, and beautiful surroundings we find here.

[Rob]

I picked Sharply lower, but 350K seems to be more in line with realistic numbers. It will all depend on the economy and interest rates next year.