L.A. prices down 16.5%; Miami's bubble now bigger

This morning's Case-Shiller home prices report shows prices fell by 16.5% in Los Angeles over the past year -- one of the steepest levels of decline in the nation. It also shows that Los Angeles no longer has the distinction of having America's biggest housing bubble -- that honor now goes to Miami.

More data from the report, which many analysts consider the most accurate measure of home prices because it tracks individual houses over time:

--Price declines in Los Angeles are accelerating. Prices fell 3.1% from November '07 to December '07, and 3.7% from December '07 to January '08.

The weakest housing markets in the nation, according to the report:
1) Miami  -19.3%
1) Las Vegas -19.3%
3) Phoenix -18.2%
4) San Diego -16.7%
5) Los Angeles -16.5%

Composite for 10 largest cities: -11.4%

The biggest price bubbles in America, as measured by price increases since 2000:
1) Miami 225.4
2) Los Angeles 224.4
3) Washington DC 212.8
4) New York 200.5

Thoughts? Comments? Email story tips to peter.viles@latimes.com.

Comments

[firesale]

Dear CH Phan:

Let your wife win. Price correction will eat up
your deposit. Then you can divorce and she'll
get less.

80% of the stupid RE purchases in the past
6 years were fueled by just this type of
thinking -- she's gotta have her house-- even
though it made no financial sense.

Give it to her, buddy, ... and prepare to bail.

[the problemwithcaring]

i am in escrow on a house in los angeles right now. i don't care about finding the bottem of the market. i am going to rent out the house and pay the mortgage with the rent money.

Posted by: mike |

Is this punctuation mike?? If so, dayum! How long are you gonna be in escrow? We are well past the 30 day mark - trouble in Reseda? Say it aint so. This is another house?

Anyway, I think it's amazing that DC bubble deniers are still in vogue right now. Gentrification was a contact sport during 2002-2006 when I lived out there. Spending $600K for a row house, then spending your weekday mornings *running* through crack vials, gunfire and syringes to the metro/subway stop in Columbia Heights, was a badge of honor. (Columbia Heights is also the regional headquarters of the El Salvadorian gang MS13 BTW). Now, not so much. The cry now is "Sure Capitol Hill will take a hit but Alexandria is immune!"

Hey, at least row houses have basements. How do you teach the kiddies to dodge bullets in stucco box sitting atop the ground in Moreno Valley?

[Dave9]

There's still a way to go if you project using the case-shiller HPI. If you project linearly using all the data after the peak, the HPI will be 100 in 2011, so pre-bubble prices. If you project using only the last 3 months, you will bottom out in 2009. That's assuming that the current rate of correction continues and a linear fit is appropriate.

As far as Case-Shiller not using new construction in its estimate, if you assume that all the new houses/condos are more supply on top of older houses, then the HPI will underestimate the drop in prices. So in reality, they could be falling faster than the HPI would indicate.

[Dave9]

To CJ Phan, i think you should wait 1 to 2 years and save your money. The prices are going to keep falling for at least that long. If you buy now, you will pay too much and lose value. But if you wait (and it's not too long) you can save even more than 20% down and you will need to mortgage less.

[jagster]

cj,

If you take left of lefty's advise you may regret it later. It's most likely a house worth 550K today will drop about 100K by the end of the year. If you don't mind losing 100K in less than a year then go for it and take left of lefty's advise.

[save your ammo]

LAKER'S ADVICE TO PHAN:

"As long as you buy withing 5-10% of the bottom you will be fine.
It is much easier to find that point than you think. Simply wait till the prices per Case shiller for example goes up 5-10% month over month. Then, you know we passed the bottom and you can buy. Don't worry to miss this, as house prices will not double in price in one week...
Watch out for the bull trap, 1-2% up tick is not recovery, it is a trap. If the decline continues, we might not even see a bull trap, but still be ware of one."

I DON'T THINK THIS IS ACCURATE.

Bull traps are not 1-2% upticks. Bull traps look like
5-10%, month-over-month upticks. A dead cat bounce
on a graph looks like a sharp, fast spike upward that
quickly loses energy(buyers).

At the current sharp angle of decline, there is sure
to be several such upticks (prices never fall in a
straight line to the bottom). Eventually, the dips
and upticks will level out into an averaged curving
slope that will level (fails to rise or fall). This no change
period, over a significant length of time(year over year),
will signal the true bottom. As with stocks, the
fear and misery at this point will be such that the
masses will be rethinking the American dream of
homeownership. When stories like this are showing
up in the popular psyche of a market, then you've
hit bottom. On Wall Street, it's the day you can't
sell a stock to anyone because everyone is a
seller. A bottom feeder knows this moment.

[joe]

relating to real estate prices we are probably half way through the decline. with the whole infristructure here a mess and traffic and other issues this is not the greatest place anymore. the city wants to charge every renter trash pick up fees.odf 40 a months major antonio hopefully will not approve this yikes.
joe
no hollywood

[Geek Seek]

For Lefty's edification (and ours too), it would be interesting to see what's happening with "metro l.a." I'll do the work if someone shows me how -- compare sales prices and inventory for just the downtown area.

I did the first half of my downtown safaris, to see what's happening out there. Drove through the entire downtown area, and even got out and walked in a few places. It wasn't the creepy ghosttown it was 10 years ago. Got off the freeway at the staples center, and there were plenty of people driving around and walking, possibly the stragglers from some event. The area around Staples was very well lit and even a little city-walkish with all the video and neon.

There were plenty of police patrol cars in this immediate area, basically circling the staples center. If this is a nightly occurence, could be that the strong police presence is doing much to generate a feeling of safety there.

Once out of that small area, the streets were fairly quiet, and fairly well lit. We passed by a new convenience store, well stocked with basic groceries, but other than that everything was closed.

What we didn't see was thousands of homeless people. Even right across from the Midnight Mission there were dozens camped out, but hardly hundreds or thousands. I've seen the number "15,000" thrown around a lot, but if there are 15,000 transients downtown, they are hiding or find shelter for the evening. Where are they? Off of skid row we only saw a few people that were camped at the side of a building.

There were plenty of signs advertising loft space, but couldn't see any of the loft-folk. They must have been sequestered in their loft-garrets blogging away.

Really, the only signs of life outside the Staples center were in Chinatown and Little Tokyo.

In a few days we'll do the daylight portion of the safari.

[clipper]

Below 2001? Laker, yes. I'm with (I foget the significant forecasters name) whatshisface, who predicts 60% drops most recently - and I think it could be more. What year does that get us to based on the downward curve in your chart? More importantly, I think that shoes will continue to drop throughout 08 and into 09 which will prolong the credit retraction. After all, Bear Sterns was saved -- there will be 5 more and the Fed will stop saving by case 3 - this thing is just getting started. We will see 1 or more big houses fall. And regarding rates, rates are already at .08 for jumbo by WF, calculate that on a loan that qualifies as jumbo - which isn't far from the median right now.

[Tourist]

I live in Miami and made a killing in the run-up. I quit buying in 2004 and sold in 2006. However, in the last 2 months I have bought 2 properties, 1 was originally listed at 780K, I paid 205K. the other a commercial property was listed at 995K I paid 618K. There are some incredible buys coming on the market here, but they are being snapped up. I can assure you sales here have increased the last 2 months as banks begin to unload realistically. Two of note are a 700 sq ft condo, waterfront building on the beach sold last year for 320K, lasted about 7 hours on the market at 54K and a 900 sq ft condo near Johnson and Wales University, sold a year ago for 155K lasted about 3 days on the market at 55K.

[KingHorse]

Home prices need to continue to drop. They've been shockingly overinflated for 5 years, there's no way around it. Otherwise we just continue with rate cuts that do more & more damage to the dollar and the economy without stimulating borrowing in any significant way. Though I understand it intellectually, I resent the news reports treating price drops as bad economic news. In the long run, it's the opposite.

JB: Not voting is the worst possible way to make your sentiments known.