SFV sales dropped 51% in December

Good afternoon. Headlines, highlights and lowlights from the Southland Regional Association of Realtors' press release on 2007 home sales in the Valley:

--The number of homes sold  in 2007 dropped 34.9% from 2006 levels.
--Sales of single-family homes in December 2007 were down 51.6% from December 2006 levels.
--Median price of homes sold in December '07 was $480,000, a decline of 14.3% from the December '06 median of $560,000.
--Total 2007 sales, of 6,271 single-family homes, is well below the previous low -- 7,774 in 1992. Annual Valley sales in this cycle peaked at 13,878 in 2003.

"Sales are down and prices are soft, but people have to be shaken out of their attitude that prices will plunge dramatically," said Mary Funk, president of the SRAR. "I just do not think resale prices will go down nearly as much as some people believe. There is no bell that goes off when the market hits the top or bottom of the cycle, so anyone who needs a home and is waiting to catch a steal may be disappointed and may miss an opportunity."

Added Jim Link, the association's CEO, "... there are too many prospective buyers who think prices should be much, much lower, and think they can snag a super bargain."

More: SRAR stats show that, in the last housing slump, median single-family sales prices in the Valley peaked at $245,000 in Nov. 1989, and bottomed out six years later, at $155,000, in Nov. 1995 -- a decline of 37% spread over 72 months. Prices did not bounce off the bottom quickly -- they remained at or near $155,000 for 15 months.

In this housing slump, median single-family sales prices in the Valley peaked at $655,000, in June 2007, and fell to $537,000 by December -- a decline of 18% in six months.

The two cycles appear to be very different. In the previous cycle, prices peaked 15 months after sales peaked, and then declined gradually for six years. In this cycle, prices peaked 60 months after sales peaked, and have declined rapidly. I'm not entirely sure how much is to be gained from looking at the two cycles side by side, except to make note of the differences.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: Warner Center, by L.A. Times

Comments

[jonah1979]

I don't think the percentage a housing market drops in value or how long it takes to drop matters. What matters is when when housing comes in line with incomes in the region and right now they are still way off. It could take 72 months for this market to finally turn positive.

[arroyogrande]

"There is no bell that goes off when the market hits the top of bottom of the cycle, so anyone who needs a home and is waiting to catch a steal may be disappointed and may miss an opportunity.""

A great tactic for a sales person to use - instill fear in your prospective 'mark'.

Remember "buy now or be priced out forever?"

- arroyogrande

[CD]

Why should one buy now, in the middle of this turmoil? Now, who should we trust: Nouriel Roubini, Robert Shiller, Georges Soros just to mention a few, or the NAR gang of fools? By the way, Citibank just quit wholesale lending today.

[Karl]

Wake me up when prices drop another 22%......and new buyers can come up with 20% cash down.

[Joseph...The Real Estate Guy]

I hope by now, all those new Agents have found Employment somewhere else.

And don't even bother to re-new your license because this downturn is going to be long! between 7-10 years. And don't dare to come back and mess up the market again.

I see a gradual downturn.

[original thinker]

Peter:

It strikes me that few know there is something
of an economic picture for judging when the RE
bottom can and will be reached.

WOULD YOU PLEASE PUBLISH A SCALE GRAPH
OF S. CA RE prices from 1980 to 2008.

Overprint a rising medium price line so that many of
your readers, who appear to have no idea what a price
bubble looks like, can see just how far above the mean
line we currently sit.

They need to judge what 1990 looked like compared
to 1995... and what 2000 looked like compared to last year.
Hopefully, this will allow them to grasp the slow moving
symetry that RE graphs almost always complete over time.

Week after week, in reading through this blog, I am struck
by how many view negative projections made here as some
kind of crystal ball argument. Publishing the graph would be
a polite way of saying, "No. It's not just my opinion,
you stupid idiot!"

[Roonies]

Again, the outrageous home prices have to come down - way down. Who can afford a 50+ year old house for $700,000. I keep scratching my head trying to figure out who buys these over infated homes!

[l.a.guy]

As I peruse the Valley real estate listings I don't think most sellers have gotten the memo that the price structure has to change to compensate for the dramatic (but necessary) changes in financing requirements.

I just spoke to a mortgage that said for homes over 1 million dollars, many banks will now only go 70% LTV for the first. You can still get a second, but only for 10%. In practical terms that means for prime borrowers looking to buy a million+ dollar home, you now have to come up with 20% down instead of 10%. (or $100,000 on a million dollar). That's a big difference and I think will have a chilling effect on all those big ticket homes in the Valley.

[Laker]

"people have to be shaken out of their attitude that prices will plunge dramatically," said Mary Funk, president of the SRAR"
Hey Mark! Wake up fool. Didn't you say we are priced out forever? House prices never go down. You are so full of SH%^. Give me a break, you and you NAR and CAR propaganda. Are you guys liars or simply bunch of fools? Prices have dropped 14% YoY and 18% in the last six months. Properties are not selling! December 06 house sold for $1,160,000 did not get an offer past $700,000. Do you get that? $1,600,000 house sold in January 06 is now offered at $900,000. Wake up degenerates and accept reality. Incomes did NOT rise 300% in the last 7 years. Option ARMS did. They are gone now. no 80/20 for 500 FICO. NO 0 down for deadbeats.
Look at the median mortgage payment in the last 7 years. It barely went up, and only did so because of over extending and not because of income rise
And my friend Jim Link, You still could not locate the link to your brain. You are trying all you can to brain wash, something that you were successful some time ago. Not anymore, please repeat after me. Prices of houses need to match incomes. I'm talking about 3-4 bedroom 1800 sq ft shacks built in the 50s. No foreign investors will buy these! Smart speculators, (if something like this exists), staying out since they know that they could not flip the houses unless they hold them 10 years with negative cash flow....
fools and "demagogs".

[Bush]

a decline of 37% spread over 72 months in 1989...
We already did half of it in 6 month. Ahh, Boy, look at the rate of foreclosures and the records broken that beat the 1996 levels. And we are not even at the peak of foreclosures...It looks like we will have 37% drop in about 18 months, and a full 50% drop in 24-30 months.
SRAR, NAR, CAR are so funny. Trusting them and their analysis is like buying air from used car dealer...pathetic.

[Patiently waiting...]

"Sales are down and prices are soft, but people have to be shaken out of their attitude that prices will plunge dramatically," said Mary Funk, president of the SRAR."

She's right: prices won't plunge dramatically, like the Titanic. It will be more like the victim of a quicksand pit, slowly being pulled down ... or even more to the point, like a frog in a pot of cold water which is very gradually brought to boil, so slowly the frog doesn't even know he's being boiled alive. Just like homeowners blithely thinking all is well, while their home imperceptibly sinks into the pit.

[sunsetbeachguy]

Forgive me Peter but I have to vent.

These F@xcbgtf& realtwhores and the brain-dead reporters that quote them are stealing my oxygen and the earth needs to be relieved of their burden on the ecosystem.

How stupid do their think their customers are?

Buyers determine the prices and by extension the realtards commissions.

Why would a realtard insult 50% of their customers? That was a rhetorical question since no one has ever accused the realtards of being the sharpest tools in the shed.

Buyers determined the prices on the way up and will determine the prices on the way down.

The realtards want their customers to go ahead and ignore the biggest credit crunch ever measured.

http://krugman.blogs.nytimes.com/2008/02/
04/credit-crunch/

The Realtwhores must be disintermediated for their duplicitous and disastrous behavior during the bubble run up and the continued denial of a bubble.

[Keith]

"so that many of your readers, who appear to have no idea what a price
bubble looks like, can see just how far above the mean
line we currently sit."

Why do you make this statement Original Thinker? I think the vast majority of the people on here understand "the Bubble"

[mbob]

If anyone can find 80+ year olds to query, here's what will turn up -- after the '29 crash, '30 and '31 weren't all that bad. By '32 a spiral started, '33 and '34 were horrible, '35-'37 began to reflect some of Roosevelt's desperate measures that worked (a lot didn't), '38-'39 were only so-so, '40 things were starting to head back down again, save for industries that benefited from helping to arm Great Britain. Then Pearl Harbor was attacked and the great war machine reflated everything.

What does this have to do with us now, here? Plenty. Presently, we are at around late '29, maybe '30, except much worse in terms of personal savings, indebtedness, etc. Bush tried a war and this time it didn't help. Unless you are K, B & R or Blackwater.

The quicksand analogy is pretty apt. A grinding erosion is what likely lies ahead of us, for our currency, our standard of living, our quality of life.

Oh, one other old timer anecdote -- in "Hollywood" the depression never quite hit as hard as say, Chicago or Detroit. The studios were a good place to work. But back then, there were lots and lots of movies. Now, entertainment is made by fewer and scattered across more platforms, like the one on which you are reading this. No safety net this time, painting scenery or rigging lights.

[Keith]

The current business model in the Realtor world is to instill fear in the buyer. No wait, that's actually been the business model for several years now.

First it was "priced out forever"
Now it's "gonna miss your chance"

So the realtors say what they have to say to keep putting food on the table, it's all part of the game. Eventually, you know, they'll be right.

[amir]

"ha ha!"

Nelson Muntz, Simpsons bully.

[Dankster]

"There is no bell that goes off when the market hits the top of bottom of the cycle, so anyone who needs a home and is waiting to catch a steal may be disappointed and may miss an opportunity."

It's a philosophical question: does the bell make a sound if no one is listening?

Real estaters would like to have us believe that there are thousands of purchase-delayers waiting on the sidelines to pounce on homebuying deals. Wishful thinking at best.

The number of ready-and-willing buyers out there waiting for a bottom to be called is too small to actually form a bottom under this falling-knife market.

[jonah1979]

According to housingtracker.net the asking prices have dropped another 3k since last week and nearly 25k since December. Looks like we're in the midst of a free fall. As long as I see the downward movement I'm not buying anything.

Plus I love to display my attitude of "waiting for a bargin" just to piss the realtors off.

[Joe Facciano]

The big difference now is that the mortgage industry is calapsing. Without a loan, who can buy a house. Without a mortgage industry, prices are going to drop like a rock. $100,000 houses are a few years away. Once houses start to go upside down, people will walk away from them. Then the banking industry will calapse and the FDIC and the Federal Reserve will have to bail out everyone. It'll be 1930 all over again. Hoovervilles are starting to show up in some parts of LA already. Better go buy a cheap used RV while they're still around.

[AnnaS]

Wasn't their a recession in Los Angeles in late '80s and early 90s? Then there were riots, floods, fires, and a little earthquake in '94? It was like the ten plagues.

Perhaps with the current economy the Bay Area is a better indicator for how the housing market will function? The market in the Bay Area goes up for a while and then goes down, but doesn't tend to bottom out, although I'm not sure of the details. Perhaps you can run some numbers on this blog showing Bay Area numbers how long do they go up, how fast do they go down, etc...

[Cal]

You can go read end of the year press releases for the last 17 years of the SRAR and they always assure everyone that now is the time to buy and if you dont buy you are missing the boat.

It would be a breath of fresh air if instead of their sales pitch that make them look like dishonest hucksters they just stated the facts. But they cant, they have to live in their happy dishonest world or else the real estate fairy will take the magic fairy dust away.

Not only have sales NEVER been this bad, with the last 4 months at records lows for any month in SRAR history, but their precious dearest median price (which is a horrible metric, but they believe in it) has dropped 108k faster and farther than any time in their history.

They claim the foreclosure problem wont be that bad here because its a mature market, hogwash. The subprime and Alt-A concentrations are extremely high in the valley as was flipping activity.

We in the valley have had slowing sales in the face of population growth, people are unable and unwilling to buy. Only "affordability products" such as IO and option arms combined with stated income kept the (slowing) train of housing running as long as it has. Now without falling prices and tightened lending standards the chicken has come home to roost.

The SRAR cant be honest about these things for many reasons, they've kept the false front up for so long if they "find jesus" now their real constituency (the agents paying dues) would revolt. The SRAR and people like Winnie Davis and Jim Link believe that if they lie through their teeth in the face of all the horrible statistics and facts facing them that they can deny reality. Well reality is here and it doesnt care about their lies.

Such horrible incompetence is disgusting, if they just chose to be honest instead they might be someone that people listen too. Instead they chose to be cheerleaders and now will do what cheerleaders always do, sit on the sidelines unable to change the outcome of the game. The one good thing about this housing bust is to see this incompetence rewarded with this slow painful death by reality.

[Ann]

WOULD YOU PLEASE PUBLISH A SCALE GRAPH
OF S. CA RE prices from 1980 to 2008.

Overprint a rising medium price line so that many of
your readers, who appear to have no idea what a price
bubble looks like, can see just how far above the mean
line we currently sit.

They need to judge what 1990 looked like compared
to 1995... and what 2000 looked like compared to last year.
Hopefully, this will allow them to grasp the slow moving
symetry that RE graphs almost always complete over time.

Posted by: original thinker

________

(1) Keep in mind that you can not compare 1990 prices to 2005 or even 1995 without making an adjustment for normal inflation.

That means taking the 1990 price and plugging it into a CPI (Comsumer Price Index) calculator to get the 1990 price in 1995 dollars; or the 1995 price in 1990 dollars.

Typically housing has gone up in an amount equal to the rate of inflation +/- 1 to1.9%. (And that has been stady for around 350-400 years. See, Schiller's research.)

If the house is $100,000 in 1990 and $75,000 in 1995, it fell more than 25% when adjusted for inflation. $100,000 in 1990 is the equivalent of $116,600 in 1995 Ergo the house that was $100,000 in 1990 which should have been $116,600 but was only $75,000 actually fell 35.6%, not 25%.

(NOTE TO PETER: When you quote YTY prices, those are NOT adjsuted for inflation which has been put at around 4%+ for 2007. That means adding another 4%+ to the YTY drop when calculated as a %.)

(2) This interactive graphic might be interesting for you. It shows the rise and fall of housing prices in specific cities as compared to the national market and the prices are adjusted for inflation:

http://www.nytimes.com/interactive/2007/
08/25/business/20070826_HOUSING_GRAPHIC.
html?adxnnl=1&adxnnlx=1202201144-WcRjRpaaNZ
1ubcBfjgwYRw#

[Ann]

If anyone can find 80+ year olds to query, here's what will turn up -- after the '29 crash, '30 and '31 weren't all that bad. By '32 a spiral started, '33 and '34 were horrible, '35-'37 began to reflect some of Roosevelt's desperate measures that worked (a lot didn't), '38-'39 were only so-so, '40 things were starting to head back down again, save for industries that benefited from helping to arm Great Britain. Then Pearl Harbor was attacked and the great war machine reflated everything.

Posted by: mbob

You need someone a LOT older than 80 or 90. An 80 yer old would have been born in 1927 and would only have been 13 or so in 1940. Kids are NOT reliable witnesses. Maybe a 90 year old would do but they wouldn't have been 18 until 1935 - and not exactly aware of trends and events.

Luckily some of us speicalized in the political, economic and social history of the period - and had grandparents who were 20-something adults in 1929 and great-grandfathers who lived through the Depressions of 1893 and 1929 who were around until we were nearly 20.

For a well-written and correct history of the events of that time - and in only 1 volume - I recommend " Freedom from Fear: The American People in Depression and War, 1929-1945 " by David Kennedy.

For oral histories from those who were old enough to understand what was happening then, try " Hard Times: An Oral History of the Great Depression" and "Coming of Age: Growing Up in the Twentieth Century " both by Studs Terkel .

The New Deal couldn't completely end the Depression - it simply did not pump enough government spending into the economy nor remove enough people from the civilian workforce until WWII. It did however bring order out of chaos, stabilize the bankiing system, keep people from starving and prevent the rise of fascism or communism - both of which were appearing to be very viable alternatives to the millions of depserate people.

[Bots]

"As long as I see the downward movement I'm not buying anything."

jonah1979,

Do you have any idea how profound your statement is?
i.e. - Rates don't matter. Credit doesn't matter. Prices no longer matter.

[SReno]

Mary Funk is trying to take your life and your future from you, Why? So she can buy a few more toys for herself? This is truly the face of evil, total disregard for the wellfare of her fellow person.

[Robert Constant]

Why listen to anything a Realtor has to say? People become RE Agents because they are incapable of doing anything else.

"Those who can, do .... Those who can't, sell Real Estate"

[William]

It would be great, as already said, to see a chart of median house prices over the last 30-40 years, perhaps also with interest rates and selling rates - would be very informative.

[Bo Raxo]

How about relating median house prices to median incomes? Or to rent multiples? Using the latter, the current median of around $480K still looks very high. If you can rent the median priced home for half the mortgage cost, and prices aren't rising - never mind falling - you're still very overpriced.

Last bubble saw an inflation-adjusted drop of 50%, spread over several years. Expect something similar here, with the price decline curve gradually flattening. Prices will continue to decline for another year or two, and then stay flat for two or three more years while inflation injects a decline in real dollar terms.

By the time of the next presidential election in 2012 I expect median house prices in the $350K-$400K range, perhaps a bit higher if inflation kicks up - a real possibility given the dollar's erosion against other currencies and rising energy costs.

Real estate agents, you should seriously think about a change to some other type of sales, at least the ones in residential. Your field is going to be sour for the next four or five years.

[Liz Armitage]

I am one of those "buyers" who is now looking to buy a home that seems reasonably priced. I stayed out of the market for the last five years simply because I couldn't afford what I liked and I didn't like what I could afford.
So I've been going to Open Houses for the last few months and 90% of the time, I am the only one viewing the house, according to the realtor's sign-in sheets. Yet, the realtors keep telling me what a great time it is to buy.....if so, where are all the buyers?

[Look Out Dow Below]

Yeah, this time is different than last time.

Last time, people needed to put down a minimum of 5% down, however, the majority put down between 10% to 20% to buy a home.

This time, it was no money down for the greater majority.

Last time, banks would go over line by line on loan applications, tax returns, etc. to make sure your qualified for the loan.

This time, banks basically wanted to make sure that you were just breathing so that you could sign for the loan. (Although that has changed in the last four months).

Last time, a person making $100,000 would not get a $500,000.00 loan.

This time, a person making $60,000 was able to get a $900,000.00 loan.

I could go on, but you get the point.

Yup, major differences that people in the industry don't want you to know about because their financial well being depends on it.

No problem here.

Move on.

[Pat Paulson]

So these pesky bargain-hunters should go away? When sales are down 51%?

Nevermind, they'll all jump back right in when they hear that !

I know I'm encouraged.

[mbob]

Ann

Read more carefully. I wrote "80+"

NOT Reliable? Huh, that's funny, my neighbor was 6 in '33 and was aware enough to describe for me how dead farm horses she drove past in the dustbowl featured legs that stuck straight out, not bent. She was quite reliable, actually.

Unluckily, you presume too much and condescend too freely. The patronizing, smug litany of library titles must do something for you.

In academia, the fights are so bitter because the stakes are so small.

Oh, and thanks for validating my assertions.

BTW my parents were married in '34.

[jonah1979]

Bot,

I don't catch falling knives! You're right, rates don't matter, credit doesn't matter and price as of now, doesn't matter.

What matters to me is what I can afford with my lower 6 figure income and right now it's not a whole lot. I strongly believe in the 30 percent rule and currently the average mortgage holder in L.A. is using 60 percent of their monthly income on housing. There goes their retirement and college fund for their kids!

[Laker]

Posted by: Liz Armitag "where are all the buyers?"
Liz, all the buyers are split between two groups. Half (Stupid) want to buy, but can't since they cannot afford the payments, Option ARMS and 80/20 IO loans are no longer available. The other half (smart) are sitting on the sidelines, enjoying the declines (free fall in prices) and either offer low ball offers (40% less than asking) or simply don't even bother to waste their time to see these super inflated houses...
Since we are seeing a decline every week ($5,000 per month), why would you offer asking price? Why to buy at all? There is no way market will turn around and prices will increase 20% in one month! So, smart will wait until price at flat for some time (no more drops) then if inventory will decrease significantly, that will be a good sign for market bottom. In fact, this is the best way to catch the bottom and not a falling knife. Wait until inventory drops to less than 15000 houses compared to 41,000 today in LA.

For the smart researchers, can anybody link to a graph/chart that shows median house mortgage payment? I think it will have 10 fold more meaning than housing prices. Since i believe that the median mortgage payment was relatively constant (dependent on wages no mortgage product) with some increase due to craziness and over extending. But still it for sure did not increase 300% since 2000. Since funny money loans are no longer available, we could extract/transform the latest mortgage payments into 30 year fixed at going rates to determine house prices.

[LA-Architect]

We are also sitting on the sidelines waiting for decent price declines. These so called Real Estate professionals need people to buy houses in order to get a commission. Why buy an overpriced house and be on the hook for a huge mortgage. It makes no sense! As I remember during the "BOOM", the price of a house was determined by what the buyer was willing to pay. This still applies. That's why sales have fallen so dramatically.

Anyway, wake me up when there is an additional 20% decline. I might be slightly more interested.... But then again, why buy if everything is declining in price!

[sunsetbeachguy]

For all of those asking for graphs.

Here are the graphs for LA since 1975!

http://www.thebubblebuster.com/losangeles/
summary.html

Click through all 4 pages to see:
Inflation adjusted prices
Inflation adjusted median
Payment to Income ratio
Mortgage rates
Nominal and real median prices
Nominal and Real YOY changes
Mortgage debt to income ratios
interest rates and inflation
Scenarios for reversion to the mean
32%-60% correction depending on the scenario!

[Robert in Pasadena]

I think the problem is job related- the formerly high paying jobs were long ago sent to Mexico, then China and India in manufacturing and service. Where are the people making enough to afford property in the area? I feel the unemployment rate as reported by the government is artificially low. I also think the number of employed is likely to fall a great deal in the next few years. The federal government is not capable of stopping the credit crisis that continues to spread. Seemingly credible sources (mostly English papers) hint that the US Government itself will lose its AAA credit rating for the first time in history. I have noticed more and more that once popular commercial areas like on Melrose, Beverly and just about everywhere (save Rodeo drive) have never had so much empty retail space. I would say it all adds up to the collapse long predicted by those bestsellers that started to appear in the '80s but seemed funny then because they did not appear to be true.

[MyLessThanPrimeBeef]

The Inconvenient Truth - by yours truly.

OK, this is the Inconvenient Truth: In but a few months, wealth the size of Rhode Island's GDP has been wiped from the surface of the planet, very much like the disappearing act pulled by the Larson-B Ice Shelf in the Antarctic Penisula a few years ago.

The cause? Well, I hate to sound like a broken record, but it's the Poor House miasma effect resulted from the the toxic fume discharge of the decaying carcasses of CDOs and MBSs devastated by the highly lethal and highly contagious SIV virus.

I just wish someone would make a documentary film about it.

[dwr]

"I am one of those "buyers" who is now looking to buy a home that seems reasonably priced. I stayed out of the market for the last five years simply because I couldn't afford what I liked and I didn't like what I could afford."

You would've been much smarter to have bought five years ago rather than buying now, which begs the question- why do you think you're getting a deal now?

[tarbubble]

i will not bash all realtors, i will not bash all realtors, i will not bash all realtors.... hey wait, i CAN bash propagandist shills! these people are out of their minds. who is buying? who is looking? i'm sure not. don't get me wrong, i want to own a house, but renting is still waaaaaaaay cheaper than buying and the tax benefits don't bridge that gap.

sure there's pent-up demand. there's pent-up demand for house prices that are reasonable and affordable. when you combine increased requirements for down payments, tighter lending standards, recession fears looming, foreclosures mounting, inventory increases out-pacing sales, and the general sense that the party is over, then the only possible outcome is for house prices to keep falling. guess it just depends on your definition of "dramatically." in the IE there are already price drops of 50% to be found. it's only a matter of time before it spreads.

[dav]

Here are some plots from spreadsheets I've been keeping on the Case-Shiller LA data with simple projections.

Real prices (constant dollars): http://www.flickr.com/photos/21551806@N04/
2244810052/
Nominal prices (including inflation): http://www.flickr.com/photos/21551806@N04
/2244810642/

I took the shape of the peak-to-trough decline from '89 to '95 and duplicated it to project out where prices may be going in this downturn. I first corrected the index for inflation using the CPI. I noticed that the real (inflation-adjusted) price at the mid-90s trough was about 10% higher than the real price at the mid-80s trough. So I assumed that the next trough would be 10% above the last one in the mid-90s. I scaled the shape of the 89-95 decline to fit to this level at the next trough.

I then used a 2.5% inflation number (pretty high, but reasonable I think) to project out where nominal prices would be. Note that the units on the graph are not prices in dollars... they come from Case-Shiller data which I normalized after adjusting for inflation to 100 at the last trough.

The result of this simple model? A surprisingly good fit from the 2006 peak to present prices! The trends are practically on top of each other. It will be interesting to see if we get a "fake rebound" bump in prices before the decline continues, as seen in the last cycle.

The nominal price chart shows a 52% decline in prices from the peak, bottoming at the end of 2013. That would mean a median LA home price of $270,000 (in 2013 dollars!).

Enjoy.

[Ace]

Cal said 'The SRAR cant be honest about these things for many reasons, they've kept the false front up for so long if they "find jesus" now their real constituency (the agents paying dues) would revolt.'

I have become very tired of the SRAR propeganda machine and have decided to no longer pay my dues. However, this really puts me between a rock in a hard place. I will soon be locked out of the MLS, no big deal. But they will report that I did not pay my dues to my broker and I will be sent packing. Oh well. I am sure that their are brokers out there that don't require SRAR membership.

[Jason]

We could end this housing crisis right now if sellers just cut prices, or gave the homes back to the banks and rented. The banks would price the homes correctly, because they have less emotional attachment. The average buyer like myself could actually afford something without a black magic loan. Sure, the banks and holders of SIVs and CDOs would take a hit, and many banks would fail. But that's happening anyway--the process would just be sped up a bit so we could get back to normal. That's capitalism, right?

[Joseph...The Real Estate Guy]

People will always need a home...if you qualify, it's always a good time to buy!

Some of you on this blog, will never buy, no matter where prices are.

Maybe a move to Cuba would do? for some free housing.

[Sarcastic Fringehead]

Jonah 1979, thanks for the housingtracker.net web link; it's a really valuable resource and I advise everyone to check it out.
I am also in agreement with what you said about, "As long as I see the downward movement I'm not buying anything." Now is the time to keep a cool head about real estate, be patient and wait for the right time to move.

[PREFAB SPROUT]

The median income in LA County is $42K per year. That means the average person can afford (using the "old school" normal pre housing bust formulas) about $125K for a property OR $250K for a couple looking for a home.
It seems to me that the median price for a single family home has AT LEAST another $100K minimum before buyers will start looking again.

[Kate in the Valley]

MBOB writes: "Oh, one other old timer anecdote -- in "Hollywood" the depression never quite hit as hard as say, Chicago or Detroit. The studios were a good place to work. But back then, there were lots and lots of movies. Now, entertainment is made by fewer and scattered across more platforms, like the one on which you are reading this. No safety net this time, painting scenery or rigging lights."

MBOB, contrary to your opinion above, I'd say The Industry is a great place to ride out this storm.

I'm not sure what you mean by "back then there were lots and lots of movies." We certainly see far more film releases today than we did in years past. Not to mention a plethora of "unscripted programming" providing more Industry jobs than ever before.

Next you mention that "entertainment is made by fewer and scatttered across more platforms..." as if that's a bad thing. I agree that Disney, Time Warner, NBC Universal and Viacom own and operate just about every platform you can think of (except for Google). But contrary to your conclusion, companies like those listed above, with diverse and international lines of business, seem in a far better position to weather economic turmoil than just about any other domestic enterprise.

Now that people are cutting back on spending, they'll be looking for as much free entertainment as possible. And we all know where the free, ad supported, entertainment comes from, don't we? (Hint: It starts with an "H" and rhymes with "jolly good").

[Uncle Billy]

Did I miss Kate in the Valley's farewell to house hunting post? Did she give up the hunt 'til 2012? Did she buy something? She was as regular as tree of the week, and us old folks, we love regularity.

Renewed requests:

1) Report from "The longboarding foreclosure king" about how foreclosures are selling

2) Consolidated charts and graphs section on the blog or in the paper proper detailing all the stats we get here in dribs and drabs, updated as the info comes in. Show local and national information and boom, hit count goes through the roof. Listing/Sales prices over time, foreclosures over time, case/shiller, the whole bag o' wax (where did that bizarre expression come from?) -- all adjusted for inflation.

3) Search tool for the blog!

[Rafael Eduardo]

Things are bad, and will likely get worse. However, things will not be as bad as buyers want it to get because opportunity knocks. If you have 20% to put down and good credit-- wait a little longer and get that bargain at 2002 prices--you can't go wrong if the mortgage payment is just slightly above the Rent payment period. That, to me, is the key to real estate in the long term in California. You can't miss if your 30 YEAR FIXED payment is almost like rent. A $310K home with 20% down gives you a fixed pmt of $1,760 including taxes and insurance. You're not going to get that home for a fixed payment of, say, $1,200 because the investors would come roaring back in. Maybe my logic is wrong--but that's the logic my parents used and did work for them--and I should have followed it a little closer myself.

[farinhite_451]

Speaking of which, what ever happened to Kate in the Valley?
Kate what are your plans now?
My issue is that I know it's a terrible time to buy, but I fear getting caught in the squeeze play of future restrictive lending standards and the impending specter of hyper inflation.

[haddock]

ahem...

"The two cycles appear to be very different. In the previous cycle, prices peaked 15 months after sales peaked, and then declined gradually for six years. In this cycle, prices peaked 60 months after sales peaked, and have declined rapidly."

peter - perhaps you mean 6 months above, not 60?

[drew]

Have these people (Mary Funk, NAR, CAR) no shame?

I'm all for looking-out for number one, and making a fast buck. But, to do so over the livelihood and misery of families.

Truly despicable.

[Lou]

There was this guy at my high school in the SFV. Complete goof-off, took remedial classes, and smoked pot all day. I don't think he went to college.

I've seen his goofy mug all over open house flyers, for sale signs, and one bus-stop. Yes, he became a realtor. This just goes to show me the kind of idiots who get into that business.

[ProblemWithCaring]

Luckily some of us speicalized in the political, economic and social history of the period - and had grandparents who were 20-something adults in 1929.
Posted by: Ann | February 05, 2008 at 01:04 AM

So...did your grand-parents have kids at like age 19 and your parents at, like, 10?

just kidding! love ya!

[ProblemWithCaring]

I have become very tired of the SRAR propeganda machine and have decided to no longer pay my dues...

Posted by: Ace |

Dude, stop lying - you haven't had a business transaction in months and can't afford to pay those useless dues.

I mean, isn't the propoganda is why you signed up?(anybody interested in some of Ace's SRAR-lite propaganda, look in the LA LAND archives: Pre-Lefty c. summer 2007).

[Maggie Knowles]

Hey Liz - it's a great time to buy if you CAN buy. Not everyone has a down payment and good credit score. Fewer buyers, more inventory, sellers are competing for you (as buyer.) Still, I would wait. Prices are sure to drop some more.

Everyone else - as for SRAR, CAR, and NAR - they are trade associations, they are industry cheerleaders and lobbyists, that's their job. You can't expect them to behave any differently because that's what they're paid to do. Would you expect the National Cattlemen's Beef Association to educate the public on the risks contracting Mad Cow disease from eating beef? That would never happen. The closest they would come is to tell you that U.S. beef is safe to eat (even if there are risks). They are a trade association, they are cheerleaders and lobbyists for cattlemen and their business interests.

[Laker]

Rafael Eduardo: "You can't miss if your 30 YEAR FIXED payment is almost like rent. ...because the investors would come roaring back in. Maybe my logic is wrong..."

Rafael, First your rent = fixed mortgage + property taxes +insurance + upkeep + interest lost on down payment.
If you put 20% down on say $500,000 that is $100,000. Keep in mind that if you have this invested in bonds/long term CD, etc you can get 5% almost risk free. That is $5,000 annual that you loose by pulling it from your savings into the house.
Don't do the mistake of Rent = mortgage since the other additions will put you in negative cash flow for some looooong time.