New home glut: Inventory at 27-year high

Breaking news from MarketWatch: "U.S. home builders have slashed their prices by a record amount, but sales still plunged by 8.5% to a 17-year low in March, the Commerce Department estimated Thursday ... the supply of homes on the market rose to 11 months, the most in 27 years....                     

"Inventories are likely understated as well because of canceled sales contracts."

From the New York Times: "Sales of new homes in March plummeted to the lowest level since the housing recession of the 1990s, the government said on Thursday, as inventories rose to the highest point in more than a quarter century."

The spin you hear from the real estate industry is that falling prices will attract new buyers. It is just as likely the opposite is happening right now: falling prices are scaring buyers. Again from the N.Y. Times: "Prices continue to fall as well, which could discourage would-be buyers from entering the market. The median price of a new home dropped in March to $227,600, down 13.3% from a year ago."

Analysis: This is a pretty big economic problem. Home-building is at a standstill because of the inventory glut. It doesn't make sense to build homes if you can't sell them.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Catalist Homes

Comments

[grow]

ha, ha, ha, welcome to a new world order. greed is not good.....

[steve]

This is just the begining,It will get worse before it gets better.If I hold out long enough I might actually be able to afford a house in a nice area.

[MyLessThanPrimeBeef]

You live by the herd, you die by the herd.

And the herd will pile into an ever more absurdly expensive housing market with as much enthusiasm as the herd will stampede out of a depreciating market.

[mike]

this problem does not affect los angeles where the demand is still relativly high

[anon]

One of our Mexican friends told us he and his fellow workers were relocating to Brazil due to the lack of construction work in the USA now.

[Raul Garcia]

This is just the beginning of the collapse of the biggest and most corrupt Ponzi scheme in the history of mankind.

To top it off the government used our tax dollars to bail out one the worst abusers.

[Nirad]

The only loans allowed now are those with 20% down, but those few who actually have 20% down don't want to run the risk of losing a substantial portion of that down payment. When you consider that the average homeowner only stays in their house for 5 years, and that housing slumps take a long time to correct, the potential for losing some or all that 20% is high. Obviously, the banks know this, which is why they won't accept less than 20% down.

[Mike]

Maybe my wife and I will actually be able to buy a house eventually which we haven't been able to afford even with a $125k salary! It's ridiculous. All these schmucks that bought more house than they could afford now want the gov't to bail them out? How is that? I have a couple thousand on my credit card, can the gov't pay that off for me?????

[Tony W]

Flip that house now you greedy scammers!

[Bruce]

It appears qualifying for a loan is a problem now that the lenders require something down and verification of income This may be a long term change and will effect new home sales and re-fi too. Appraisals will become more strict as comps head downward. All the factors that lead to this run up in prices are being reversed with the predictable results.

Looks like everyone is investing in wheat now!

[Patrick Duffy, HousingChronicles.com]

It seems that there's this big presumption out there that this will be contained to the housing market and that everyone not working in real estate will keep their jobs and be able to pounce once prices decline. But what if you lose your job because of a deeper and wider recession, your credit tanks and you can't find another job that pays as well as the last one? I know people who are losing jobs in all fields completely unrelated to real estate due the current environment. What do you intend to use to buy that new home down the road -- anger?

[slimboy]

Take notice all you existing home sellers:

For those of you trying to sell your home for more than DOUBLE what you paid for it just three or four years ago, THAT SHIP HAS SAILED!

I'm talking to you people -- yes, you on the "west side" and Mid-city. Your home ISN'T worth over a million. Not even 700,000! GET OVER IT!

[ruthless genes]

the only thing to export now is debt... sweeet.

[Graham]

This is a great time to secure lease/options from small builders. Just make sure your option price accounts for more decline.

www.creditstockpile.com

[the descendants]

This is only a sign of bad things to come. Things will only get worse...we must approach the darkest hour before the sun will rise again.

There is a rumor that the bloodline actually exists.

And the evidence is now in human form.

[Eric Werner]

People ("experts") as well as the media keep acting like this wasn't coming. I mean, come on! With California's high property taxes, maintenance etc., I'm not buying a home until I get a manageable, fair mortgage to pay. The simple fact is the product is WAY overpriced for the middle class.

[Jeff W]

What do you mean? Affordable housing? Still unaffordable for this middle class wage earner.

[CrabsnCancer]

The reason nobody is buying homes right now is because of the difficulty in being able to secure loans. Home prices during Mid-Boom were un-affordable per se... but people were able to get easy, no-qualify 0% down loans. Because of that disaster, loan institutions have tightened up and with no free-flow of money the market is realizing that Home Prices are way too expensive for the average Joe to afford a home at a conservative and secure loan.

[John]

first they ran up the tech bubble, than they ran up housing, now there running up commodities, fuel, rice gold. WWWWHHHHEEEENNNN will this stuppidity stop

[Duncan]

This problem doesn't effect Los Angeles? Wow, now that's someone in denial. Look at the picture genius. That's Gardena.

[whoops]

housing down 2% in some areas, and 30% in the desert.. go figure!!! if the government bails these people out it will stablize home prices, and cause a phoney floor that would make it ever more impossible to own a home with any value...

[Anne]

Mike: you are either in great denial, or you aren't paying attention. This problem -directly- affects Los Angeles. Just look at this: LOS ANGELES 493 (sold houses in March) $505,000(march price 2008) $589,500 (march price 2007) -14.33% (Change year-to-date).

For those of you that think Los Angeles is immune, you have to realize that the true"high end" Beverly Hills homes are keeping the statistical data skewed to the high. Los Angeles county's year-to-date change in house prices was -18.52% and certainly will only go further in decline.

I think the denial is fueled by greed.

[doom]

Take a good look at the picture. Notice anything?
Where are the businesses? Where are the farms? Where does the money come from to live in this kind of ecological and social dysfuntion? Well it only works if the USA borrows a Billion dollars a day from China. You should all buy canned food and a gun while you still can! And when all you yuppies die, rest assured your great Grandparents will be waiting in the "here after" to slap you in the face. frick'n idiots! Real estate is not a profession - its the avoidance of a profession! GET A REAL JOB AND MAKE A REAL AMERICAN PRODUCT stop being a disgrace to your country

[Rob Bachorik]

Excellent, it's about time to put out of business the filthy developers. I wish extremely tough economic times on all of them. Maybe some environmental law suites will follow!

[Thomas Kessler]

Can't help but disagee about demand in the LA area, I have seen 4 houses go up for sale and aren't moving in Pasadena on my block

[Figgins]

Mike, what are you smoking? It must be really good @#$% to bend reality that far.

[Jay Nickell]

I am 51,and I have seen this cycle repeated time and time again. I can only hope that someday business and government will realize that supply should be a product of demand, not the availability of cheap capital used to create more supply than the market can possibly absorb.

By the way, wealth is created by purchasing assets others are selling in a herd mentality.

[Metlin]

@ grow:

Greed is good. But you must be wise about it.

A lot of people bought houses without thinking about the market, or the consequences. Similarly, a lot of these very same people borrowed against their homes for their flat-screens and vacations.

Well, too bad. The bubble is burst, and idiocy is punished. News at 11.

[Sam]

What is wrong with the housing industry? Duh! Greed all across America. Everyone selling anything wants top price and not a cent less for their s....stuff. "Greed is the American way."

Builders have cut the price of new homes?? Well, buddy builders, not enough!

[Billy]

Almost all markets reflect consumer confidence. A home, for most people is the biggest purchase of their life. If a family is worried about their economic future why would they attempt such a large purchase? Good paying jobs are scarce. You can’t hope to make a mortgage if you think that you will be working at McD’s next year.

[Steve]

There is a price at which any house will sell today. And it is obviously lower than what any unsold home is listed at. Headlines like these are pointless. The homebuilders are attempting to sell houses above what anyone is willing to pay for them (ie. above the going rate, market price). That will always result in lower sales figures. If they want to sell their inventory then they have to lower the prices to a level where a buyer is interested in making a transaction.

[oldbiker1]

At least that sign company is busy -- that's something. As far as house prices ... what goes down must come up? right? over the last 100 years it has been a "down one step, up two steps" - we bought in '68 for $27,500 - today, even at depressed prices, our house is worth $400K -- so, prices will go back up eventually.

[Daniel D. Johnson]

SO you think sales are bad. Have you bothered to chec the construction quality? Have You read any of the materials re the por quality of many new homes for sale? Dan Johnson 720-733-7819

[southerngent]

53% of the children attending public schools in 14 Southern States are now elgible for some type of welfare. Read that again very carefully and think about it. In the past a man who found himself without a job could fall back to another level and continue to support his family, maybe not at the same lifestyle..but, he could put food on the table. Now that most of our factory jobs are gone, we have lost that ability. A man without a job and can't buy or sell a house to relocate....creates a very big problem. NAFTA did that....and you are a fool if you think it will not get to you a some point. Yes, Welcome to the new world economy. Got Rice ?

[Alex]

The housing boom is primarily why we're in an economic meltdown. Mortgage companies qualified those who couldn't really afford the home and in turn caused finanacial plumiting

[William]

You probably are frustrated for not being able to afford to buy a house but don't jump for joy because the housing market is affecting the economy severely that you may not have a job to even put food on the table...

[AZmac]

Bush says, "It's not a recession, it's a period of slower growth", "it's not an escallation, it's a surge."

You can mince words, and you can play with semantics, but a spade is a spade. And this is a president who has never learned how to say "nuclear."

I'll be so joyful when the saddest presidency this nation has ever seen, passes into history, and I never have to look at this buffoon ever again.

[dharper]

So what's the big deal here?

1. Builders overbuilt for years.
2. Politicians believed everyone was entitled to buy a home regardless of whether or not they could pay for it.
3. Thousands of people bought homes far in excess of their incomes because lending institutions made millions executing loans they new were not viable and the selling them off to another entity.
4. That entity then bundled them off to "hedge funds" and VC entities which in turn "re-bundled" them to the Bear Stearns of the world.
5. Now the government reinserts their "intelligence" back into the chaos they created and creates a mortgage relief package to bail out the people who over bought.
6. The the Fed jumped in and begin bailing out the greedy financial institutions who did not have enough capital to cover their loses (a***s).

So, my fellow taxpayers, guess who pays for this multitude of stupidity? You and I who have worked and saved and lived within our means which is no longer a virtue in this country.

Socialism is beginning to run rampant thru this nation. It is disgusting.

[Jackie Romulo]

In Lakewood there is a new community that has halted production since their sales are stagnant. There are about two dozen homes that have frames and shingles ready to be put on the roof, but it's been in that stage for about 2 or 3 months now. It's kind of scary. A ghost town in a neighborhood that never was.

[John Hessler]

Mike: This story is about the LA market, ya dummie

[Jerry Odom]

This must not apply to Louisiana. People are still moving in to new homes as fast as they can throw up these neighborhoods. Unreal

[mark g]

Here's a good example of why no one is buying... a home bought near/at the peak for the price below, then remodeled and put back on the market for 1.15 million and has since been reduced to the below price. It's in an average middle class neightborhood on a fairly busy street... DUH! This house needs to come back to it's bubble peak price... if it sells for anywhere near what they're asking, the buyer is clinically insane! This, of course, is just my opinion... ;-)

3235 Woodruff AVE
Long Beach, CA 90808
Price: $979,900
Last Sale: $480,000 (04/22/2005)

[Fred]

Mike, it's all connected. LA's housing market does not exist in some magical vacuum. Same goes for the Westside.

[Nanan]

Not only are the prices of homes still overly inflated even after the market crash there is also this small problem of market saturation. It is not like millions of people are becoming homeless, the problem is that builders keep building and building to the point where there are now more houses then people to live in them. Granted this is not in all areas, the housing market in LA is still going at 5-10x over material cost of the house.

If it cost 30k for the land, 40k for the materials and 30k for builders/contractors then you have a 100k house but these people are trying to sell it at 2-300k.

[Fred]

As an addendum to my last post, yes, demand in L.A. is and always will be high. It's beautiful here and you can make a lot of money. However, demand for homes at these price levels is very very low. It's a money supply problem. People wouldn't be able to buy even if they were dumb enough to try in this market.

[E]

Yet still people think that they should get triple what they paid for their house in 1999.

[tom]

supply and demand:

housing market was grossly overvalued, and now people realized houses are simply too expensive. In addition, foreclosure problems and credit debacle mean fewer people can purchase houses. Prices will fall until houses are no longer overvalued in the view of most buyers.

People just can't get passed the fact that housing was grossly overvalued--they expected the prices to increase forever without good economic justification.

[JohnnyB]

PV wrote; "It is just as likely the opposite is happening right now: falling prices are scaring buyers."

Combine that with the fact that falling prices are scaring millions of sellers of existing homes (waiting for the market to stabilize - at their continued price peril) and we have an actual glut of stupendous, record breaking proportions. Forget 27 year high... how about EVER.

Sure was nice of our big business lobby-led government and Wall Street to create an illusion of wealth through debt on the one hand, while actually DILUTING our country's wealth and future prosperity on the other hand… by selling out to the Far East, the Middle East and Mexico.

The strength of this country has been severely weakened because a small percentage of mega wealthy men stuck a arterial pipeline in our healthy blood supply, connected it to a proprietary derivative-based profiteering filtering system and re-circulated watered-down, virally infected, serum in it’s place. Let’s just call it piss.

Their criminal and fraudulently-based global financial product game plan gone awry has now begun to reek serious financial terror on 98% of the people in this country. Along with a world population of billions vulnerable to large increases in commodity/food prices and a sever weakening of the dollar

These financial institutions were/are allowed to pocket INSTANT, record breaking profits (against flawed mortgage backed future earnings formulae) all along Bubble Blowhard Boulevard by writing the rules, all the while knowing the charade cannot last. And, because the distribution of wealth was so egregious, the enormity of their greed was so widespread and so insanely overleveraged, they have the audacity to claim any negative repercussions against them will be akin to nuking the “delicate” system and therefore our country’s prosperity.

THREE CHEERS FOR CDO’s, CDS’s AND UNKNOWABLE COUNTERPARTIES, the biggest F.I.R.E scam we will ever witness in our lifetimes. Thanks for the illusion traitors.

[amir]

"One of our Mexican friends told us he and his fellow workers were relocating to Brazil due to the lack of construction work in the USA now."

Yes yes. Brazil is the new bubble!

[this is a correction - this is not the rapture]

This is a correction, it is only a correction to an over valued market. If this were the actual rapture it wouldn't matter anyways because we'd cease to exist. In the event of the rapture you will not be aware of the failure of the banking system, the loss of of wealth or income or the need to regain your profits or the appraised value of your assets. In the meantime please go back to work or get a better job or get more training so that you don't have two income households working as a realtor and the other spouse working as a mortage broker both of whom believe they can also run a property management firm on the side.

The turth is that this correction will be good for America in the long term if and when people start to accept living within their own cash flow positive means. If you are still in shock over the correction go to your nearest place of worship and ask to volunteer helping the poor and sick so you can see real suffering and then you'll feel like a real jerk for feeling sorry for yourself.

[Jon]

"this problem does not affect los angeles where the demand is still relativly high"

Actually, you are wrong. So wrong it is sad. LA county has an even higher home supply, nearly double. Prices in many areas are dropping and the number of sales is staggeringly low. With all this information in mind, I can conclude that Mike is a REO.

[blackbox]

This will not happen here because I live here and own a home here...
Huh? It will happen everywhere, even NY City when everything is said and done. Every location went into insanity, and every location will be hit before this is over. LA was late in the boom, and it will be late in the bust. Demand? haha, good one sparky!

[jaded]

Anon rote, "One of our Mexican friends told us he and his fellow workers were relocating to Brazil due to the lack of construction work in the USA now."

Will the Brazilians be branded racist when they don't want to shower their new, uninvited work force with free education, free medical care, driver licenses, and welfare?

Just asking.

[ATriana]

Well if people would simply buy homes to live in them and not for seeking a quick buck, then why not buy a house at a fallen price? That's the problem. Its need vs.greed.

[Joseph... the Real Estate Guy]

The market is plummeting in Ventura county, Riverside, San Bernardino, San Joaquin Valley, ARIZONA, NEVADA, AND FLORIDA.

Thank God is not the whole country!

Otherwise, we would be in a DEPRESSION by now!!!

The MEDIA=HYPE pushed people into buying those overpriced homes and the MEDIA-HYPE is crashing the market! DECIMATING VALUES!

I despise those HOME LOAN COMMERCIALS on the RADIO!

Most of those guys should be serving time by now!

Please write me:
asktherealestateguy@yahoo.com

[mike]

THIS PROBLEM DOES NOT AFFECT LOS ANGELES. WHY AREN'T YOU PEOPLE LISTENING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[EG]

oldbiker1 - really one step, two steps up. Have you checked this article?

http://www.wjla.com/news/stories/0408/509965.html

Just how long are these steps. If you bought in 1908 you would have been underwater until 1946. A 38 year step down? Prices were stagnant from 1953 to 1978 - 25 years. Your theory is based on the past 30 year or so. Doesn't anyone realize that we had a wildly unprecedented run up - nothing even close. Look at the graph in this video based on the article.

http://cosmos.bcst.yahoo.com/up/player/popup/?cl=
7333181

You think the downturn will be business as usual? Oh yeah we will be back in a few years. Japanese RE had a massive run up and RE prices fell for 15 years! With the magnitude of the run up, it is conceivable people could be underwater for 20 years (if they stay put). This ability to move (up?) every 5 years may be ending.

Finally, look at this graph of housing prices compared to rents from 1987 (adjusted for inflation).

http://krugman.blogs.nytimes.com/2008/04/08/
permanently-high-home-prices/

Rents are flat, housing prices are volatile. Notice that 7-8 year dip through most of the 90's Notice that housing prices were back at the 1987 level in 1999 (adjusted for inflation). Ups and downs, but no real growth. Finally look at the 2000's run up compared to the late 80's run up. The dip in the 90's looks about the same magnitude as increase in the late 80s, but prolonged. Will prices dip like they went up? This is all unprecedented.

[$30/hr.]

Falling prices are definitely scaring buyers in to waiting. I think things are still in a state of getting worse before they get better.

And that's largely cause the state of things in these here United States *seem* to be a real mess: a war with no end in sight coupled with an amorphous and opaque terror war and Bin Laden still on the run, the mortgage loan swindle, the Bear Stearns scam reminding everyone of how empty our politician's rhetoric is about free markets, high gas prices, devaluation of the dollar, etc, etc, and now a food crisis???

Whatever the actual truth of it all may be is beside the point. Perception is what drives people's thinking.

The spin by the real estate industry has to be scaring buyers even moreso bc they're showing themselves to be so far beyond self-interest, delusion, panic, and sitting in a chair rocking back-and-forth. They're telling us not to believe our lying eyes.

[Brian Maser]

I specialize in selling single family homes and small income properties on the Westside of Los Angeles. Over the last 3 months, there have only been twelve (“12”) 2-4 unit income properties sold on the Westside of Los Angeles (Venice, Santa Monica, Palms-Mar Vista, West L.A. and Culver City). This information is based on what is reported within the MLS system. There are thousands of these 2-4 unit income properties in the locations mentioned above, but no one is buying or selling right now. Over the last 10 years, many of these properties were sold to investors who did not care about cash flow, but were hoping to generate appreciation in value and to buyers who could not afford their own single family home. We are seeing a real depreciation in value for these properties, where investors will only make a move if they can generate a 6% or more return on investment. The values being asked for the active 2-4 unit properties on the Westside still do not make financial sense at these prices. Other realtors must convince their sellers that they need to be realistic in value in order to sell. No more picking numbers out of thin air and selling. It must make sense. Brian Maser of Abbot Kinney Real Estate (Listing Agent).

[Wilbur Varela]

For all this talk of prices coming down, can somebody tell me why Studio City and Sherman Oaks are still priced close to a million dollars for a two bedroom, two bath, 6000 sq. ft. lot?

[gary]

I will never blame the buyers..........why?? because all they wanted was to own something...it is and always will be the apparassors and the banks who were supposed to be the adults in all this. We buyers be it credit or mortgages want what we can get and there is no stopping us. Its the banks who were supposed to look at the loan and laugh and say "nice try" but come back when you afford to pay US back.

[MyLessThanPrimeBeef]

Wilbur, go play that Rolling Stone's song, Time Is On My Side and you will know why.

No need to depend on others. You are as great as anyone else. Forget about the 'experts.' Those geniuses got us into this mess in the first place.

Time is on my side...Oh, oh oh, yes, it is. Time is on my side...

[MyLessThanPrimeBeef]

Brian Maser, I will keep you in mind when I finally decide to buy. Yours is a name to remember.

[LeftLA]

Nanan: You try to build a 2,000 sf house for $35 a foot in LA and let us know how that goes, okay? Come to think of it, try it in any major city.

Sheesh.

[YUM]

EG,

So if we're barely 2 years into this decline, are you saying we shouldnt buy a house for the next 13-18 years?

Please advise.

[Joseph...The Real Estate Guy]

Gary,

There is lot of blame to go around, but, I agree with you, the BANKS are the main CULPRITS!

After them, I would say POLITICIANS from both PARTIES take second place!

[Ace]

Shortly after I read the comment above about Studio City, I received this email from the police:

---------------------------------------------------------------
On Friday April 19, 2008 at 10:30am the victim was sitting in front of his residence (11400 block Laurelcrest Rd) reading his mail. The suspect walked up to the front of his house and asked the victim directions to Sunset Blvd. The victim (an 81 yr old retired physician) invited the suspect up to his porch and began to explain how to get to Sunset Blvd. As he was explaining to him, the suspect hit the victim in the face, causing him to fall to the ground.

The suspect tied the victim up to a chair with ropes and cords he found in the victim's house. The suspect took miscellaneous items from the residence and fled the location. The description of the suspect is a male black 509 150lbs in his 30's.
----------------------------------------------------------------

If you have not signed up for epolicing, you should. LAPD is finally getting high tech (although it took them 5 days to email me about that incident).

[save your ammo]

Venice, Santa Monica, Palms-Mar Vista, West L.A. and Culver City, ... Studio City, etc., etc....

Price discovery takes time. We need to wait for a
laxative called the Option ARM Reset to work its way through
the system of these more established neighborhoods. Then price
declines will come a gusher. Give it two more years and there will be
a sh-t hemmorage of RE values in these places.

Agents who want to move homes now need to
tell sellers why their houses were never worth
what they thought they were and that they won't
wait out this market unless they can hold on another
decade, at a minimum.

[shockg]

For all this talk of prices coming down, can somebody tell me why Studio City and Sherman Oaks are still priced close to a million dollars for a two bedroom, two bath, 6000 sq. ft. lot?

Posted by: Wilbur Varela | April 24, 2008 at 02:59 PM

Well if your relying on bubble blogs like this one for your information you will only get one side of the story. This blog is filled with negative doom and gloom naysayers. Don't believe 90% of what you read here.

[Martin]

Yes, the banks are the main culprit here. There's no need to explain why. The subject is rehashed in all media day after day.

In the last bubble burst, things got sticky in early 1990. However, denial ended the moment the Gulf War started. It was not until 1995 that prices started to move up again.

My point to this history lesson, however, points more to the simple fact that it took about two years (1991/1992) for prices to bottom out and another three years of slight shifts up and down. The '94 Northridge quake drove prices down at first, but then all of the restoration activity fueled our local economy out of recession.

Patience, homeowners. History suggests this too shall pass in about three years. Demand for Southern California homes -- though understandably reduced -- will be restored because the weather is good and the number of regional jobs available is high. Just try to wait this all out.

Renters, keep your eye closely on the market. If you see solid 50% declines, be ready to use that downpayment you're putting together now.

[Laker]

shock wrote: "...Don't believe 90% of what you read here...."

Sure, believe what shock is saying...and you will head to foreclosure like him...
It is actually the oposite of what he said. 90% of the people here are actually telling the correct facts, and shock, lefty, and other "good" guys are the ones telling all the BS here.

[bgirl]

I too am glad to see this all come crashing down. The economic pain I may suffer is worth it to watch all of the people who destroyed nice little towns all over CA with their srawling mini-mansions and their gigantic hummers and their gigantic attitudes. And I am not someone without means, just someone who doesn't believe in flaunting it-or using a home as an ATM for loads of crap made in CHINA. Really, I know that many of you posters know who I am talking about-the perfect little mommies down at the park taliking about their latest remodel, the guy with the cigar and bowtie driving a military sized car down a tiny two lane street. I am happy to see all of their artificial "wealth" evaporate.

[Irv]

This problem is affecting the LA area as well as all of Southern California! The good news is that land is now dropping in price as well, because of greatly reduced demand from builders. This means that the new homes will be a lot less expensive (and probably quite a bit smaller) when California building activity once again resumes.

[jeff]

me and my wife make 200k a year and we still can not afford a house in Los Angeles. Tell me how do other illegal immigrants and minorities afford a house in L.A?

We are in the biggest housing bubble in history. Don't buy now, you will lose all of your down payment in few months.

[Brutus]

When the housing market begins to go up, whenever that is, the media will trumpet it like the return of the Messiah. If you are planning on buying a house at that time, you will be too late to get the best deal.

When the mob says "real estate sucks" the wise man pays no attention. When the mob says "Real estate is great!" he does the same.

Like the man said: Live by the herd, die by the herd.

[only fact]

Last year price did drop 25%(CA). This year price will drop another 20% in 2008. Then drop another 5% in 2009. Then flat from 2009 to 2010. Finally it will go up at the rate of inflation after 2010.
Builders have to eat and feed their employees, so they will continue to build. Beleive me the replacement cost is still far below the current price of home in most cities. They will still make a LOT OF PROFIT. The fact is that it cost about 40$-50$ per SQ feet to build a decent home including materials, labors and overhead. Now depending on land value, price in Sacramento(only one example) will be about 65$-95$ per SQ feet. As long as they can get anything above that, they will continue to add more supply to the market.
For those would be sellers, u can bet on having another bubble and then sell for big profit, but personally I would suggest you to sell now and then invest on another would be bubble market. There is little chance that we will see another housing buble at this scale again in our life time.