L.A. home prices down 21.7% in last year

The latest Case-Shiller report on home prices shows Los Angeles prices fell by 21.7% over the last year and were falling at an even faster rate this spring.

Nationally, Case-Shiller shows prices falling by 14.4% in 20 large American cities (see note below), by far the steepest rate of decline in the 20-year history of the index.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.

The Case-Shiller report, which analyzes repeat sales of the same homes in large U.S. cities, shows the housing slump continues to be most pronounced in large western cities. The five biggest annual declines in price in March:

Las Vegas   down 25.9%
Miami        down 24.6%
Phoenix     down 23.0%
Los Angeles down 21.7%
San Diego    down 20.5%

Los Angeles continues to show accelerating annual price declines, although the month-to-month decline did slow a bit -- from 4.3% in the January-to-February period to 3.6% in the February-to-March period.  Still, the 3.6% decline in the most recent monthly period makes Los Angeles the third-weakest housing market in the nation by that measure, with only Miami (-4.5%) and Las Vegas (-4.4%) losing more value.

Note on "20 large cities": An earlier version of this post reported, incorrectly, that the Case-Shiller index tracks home prices in the "20 largest cities." It does not, as Bruce Webb points out in his comment below. It tracks home prices in 20 cities, but they are not the largest in America.

Your thoughs? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Associated Press

Comments

[dilbert dogbert]

"Mission Accomplished!" "Bring It On"

[Tim K.]

"There are very few silver linings that one can see in the data"

Again, what is with all the NEGATIVE SPIN? This guy most be a house flipper, or a selfish home owning SOB because there is absolutely NOTHING WRONG WITH LOWER PRICES FOR HOUSING.

This is all good news to future generations who must buy housing in the coming decade, and to everyone else in the entire economic food chain that depends on NEW PEOPLE BEING ABLE TO AFFORD TO MAKE A LIVING.

Sheesh, he talks as though we're all land-owning aristocrats. We're not. This is GOOD NEWS. His attitude shows just how selfish this "housing prices going down is bad" mentality is.

[Realist]

Look what has been accomplished in the past 8 years. House prices plummeting, families losing their homes across the nation, trillions of dollars of debt owing to China, Russia and Japan to pay for Iraq. Terrible balance of trade. Stock markets down. US dollar lost almost 25% of its value. Approaching somewhere between 8000-10000 military deaths in, or as a result of, the war in Iraq (and no end in sight), and gas prices now between $4 and $5 a gallon. Health care in shambles compared to other western countries. And who is getting rich? Oil companies, Big Pharma, insurance companies, and military suppliers. Hey, who's in charge here??

[A Rothman]

Okay. Another 25%, then I can buy!

[Al Brock]

This is not surprising at all. Prices were inflated on speculation, cheap cash and subprime mortgages. As early as 2003 some newspapers, including this one were using the bubble word.

It is also interesting to note that the cities cited in the article (LV, Miami, Phoenix, LA and SD) are all energy hogs as cities go (SD perhaps less so).

LV and Phoenix could not exist without tremendous amounts of energy and water imports. They should not exist and probably will not exist in 50 years.

[Raul Garcia]

As I have said time and time again we are witnessing the collapse of the largest Ponzi scheme in the history of mankind.

While you folks continue to grind yourselves down just to make ends meet in a place that has become a third world economy, I will have relocated to a beautiful area where the housing cost are half of what we pay here ($1000 a month for apartment in El Monte!?!?!).

Maybe I'll come back and flip some properties in a couple of years, since you people here are so eager to get bent over.

[Tony]

This is great news! Finally, home prices are approaching values based on fundamentals. But they still need to drop to be in line with what people can pay. When people like myself, single, young professionals, with 6 figure incomes cannot afford to buy a house (yes I could buy a condo), there are problems. People argue, "LA is just becoming more like NYC, where most people rent". That reasoning is rubbish, since the supply and demand fundamentals did not change that much over the last 5 years.

[mike]

i would guess that by the history of this blog most of the posters should be thrilled about this news.

[Bruce Webb]

Case-Shiller does not in fact track the "20 largest cities". For example it does not include Houston (no. 4) or Philadelphia (no. 5) or San Antonio (no. 6). For that matter it misses no. 10, 12, and 15-19 per this list.
http://www.infoplease.com/ipa/A0763098.html

Some of those are close enough to cities that are included to maybe be covered (San Jose to SF, Fort Worth to Dallas) but the actual geographic distribution of C-S is pretty odd and focused on mostly bubble markets.

Per Case-Shiller neither the Ohio or Missouri River basins have any inhabitants at all and the Mississippi is a howling wilderness south of Minneapolis. There may be no good alternatives to C-S but to use it as a measure of 'national markets' without pointing out its limitations is not doing your readers a favor. (Though the LA Times is not alone in this, just about every paper uses C-S in this same way.) The following is a link to their FAQ
http://www2.standardandpoors.com/spf/pdf/
index/SP_Case_Shiller_Home_Price_Indices_FAQ.pdf

[BigT]

Hey, you're no longer on the front page --is that a slap for running the congress-woman story?

[Pasadena]

The high end markets are still at the 2005 levels.... Still waiting for that 1998-2001 prediction to materialize.

[j]

great - prices need to come down to realistic level.

[James]

We continue to make progress in making homes more affordable. Hopefully the trend will continue and lawmakers don't intervene.

[RB]

dilbert dogbert said, "Mission Accomplished!" "Bring It On"

You got that right. In June of 2002, Bush gave a speech telling Americans to buy homes or the terrorists win! Totally CLASSIC!

From the White House press release: President Reiterates Goal on Homeownership

“Let me first talk about how to make sure America is secure from a group of killers, people who hate -- you know what they hate? They hate the idea that somebody can go buy a home.”

http://www.whitehouse.gov/news/releases/2002/
06/20020618-1.html

[Alejandro Salazar]

Despite of that decline 85% of workers in LA can not afford average priced house. Price has the way to go down before they are in line with incomes.

[Bud Spaulding]

Wait till after the presidential election and are borders are left wide open. Soon there will be mud houses and slums every where in California. Way to go santuary state. ViVa Mexico.

[Karl in Burbank]

There is more where that came from!

[Michael Snyder]

Now that the lenders have had their fingers burned by their own ninja loans, "smart money" has migrated to the commodities markets where these no-load s.o.b.s have managed to leverage the world's economy into a recession for pennies on the dollar. Following the tried and true freezing body scenario; Lenders have either frozen or reduced credit availability across the board as they try to inflate their capitol reserves on the back of the Fed's repeated rate cuts. With little money available to lend and underwriting standards that have evolved from nonexistent to draconian, a large portion of responsibility for the condition of the market once again rests on the lender's shoulders. Bubble prices need to correct, but what we're seeing here is the very people who inflated the bubble installing a vacuum pump on the market.
Evidence of the herd mentality in financial markets was in your face last week as an annalist at Lehman proclaimed $200 a barrel oil to be a reality by year's end. $4.00+ gasoline will deal the final death blow to Inland Empire real estate as commuting cost become untenable. Banks will continue to hoard resources and the dominoes will continue to tumble.
This situation could be brought under control by requiring appropriate capitalization by those participating in the commodities and derivatives markets. If you & I need to have 25% equity in a half million dollar investment like a home; where is the sense in allowing corporations & traders to lock up billions in commodities with little or no money down? An insurance company needs to have liquid and fixed assets in a specific ratio to the value of its' contracts; yet unregulated speculators using another Lehman "innovation" called a Credit Default Swap have managed to triple the costs of municipal debt in a year without having to prove they can cover any losses or in many cases even put up hard money to trade the instrument.
Much of the publicity around the subprime debacle has been meant to shift the attention of the public from the real culprits. While we go at each other; renter vs owner, land lord vs tenant, everybody vs Realtors, the bozos who engineered this mess have moved on to the commodities markets where they can really wreak havoc on a global scale.
Reganomics has almost succeed in wiping out small businesses as a source of innovation in America. In their arrogance, the likes of Chevron, BP & Boeing have forgotten their own humble beginnings in an effort to preserve their positions. The internet will be the undoing of these Barons as technology like hydrogen hybrid conversions for vehicles and solar powered homes become more common place.

[OH-OHHHHH!]

Salvation - IF, one can call it that, is in the rapid fall; after the greatest prop bubble of all time, beating 1986-1990 and 1996-2005. What should scare the bejeesus outta every prop owner is deja-vu II: Boeing already layed off hundred of defense workers - what happens when they close the Long Beach plant (C17s the Armed Forces don't NEED, nor want) in 2010??? Will every one of you whose paid thru the nose for outrageous 'war' spending, continue to allow ignorant politicians and bumbling Pentagon oaficials to bankrupt this country with wasteful spending? F22 at $140 million EACH. The new fancy helicopter and FLEET of Presidential helicopters at obscene prices...more subs, more sateilites and other fancy toy? It IS outta control, and you, we, everyone is much worse off.

[CD]

We knew it, we said it, they all laughed. And now you have the gas prices, inflation .... Yesterday financial times had a good interview with Nouriel, check it out.

[Nelcisco]

Peter-

Interesting that you post this Case-Shiller report, down 21.7% in L.A. almost immediately after you posted yesterday's Housing Track's version of how they see things.

Like I said on the last posting, data coming from RE's own is skewed.

[rich]

All this doom and gloom is really getting old. I think I speak for many when I say I am tired of reading about how my house lost $ 50 in value in the last week. .. I am very recently retired and just a few years ago purchased a small house THAT FIT MY RESPONSIBLE BUDGET and it is irrelevent if it goes down in value..Sure I would love to have bought in Beverly Hills, but I was smart enough to know I couldn't afford it. Only the idiots who bought outside their means and the house flippers should be worried and based on the constant stories in the LA Times I must assume many Times employees fit into this group !! I am also suspect of the reasons for such stories, as there may be questionable motive for trying to affect the market ??

[Geek Seek]

I sent this post to a friend of mine and his reaction was: "a good time to buy." Blasted NAR.

Nononono... you don't get it. See...

[allen]

OH NO the sky is falling. What to do what to do. the world is ending..Get over it.. If you live in your house it is irrelevent what it is worth.. A house is NOT AN ATM card and owning a house is not a constitutional right ( as people in New York will attest). I live in an apartment and I am sick of hearing these whiny stories about some illegal immagrant who can't afford their $300,000 house or the couple having trouble selling their vacation home...GET OVER IT AND MOVE ON and buy smarter in the future. This is survival of the fittiset. Darwinsim baby, let the weak die off..

[Slum City]

LA will fall even further as Americans leave a city ravaged by millions of illegal aliens.

Then we'll see what happens to the tax base. Mexico city North (Third World Slums) The FREE ride is over, schools will close next (we are SICK of paying for thousands of foreigners getting a free ride).

[Jack Spector]

Hooray for those of us who sweated it out in rentals while the rest of the world went crazy.

Home values aren't really dropping, though. They are returning to the prices that they should always have been.

[Matt]

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path,"

Very few silver linings? Really? How about for people who have been working their butts off and saving money, and are finally seeing light at the end of what has been a very very overpriced tunnel? Just because thousands of people were dumb enough to buy what they could not afford, they do not get my sympathy. No bailouts. Not corporate. Not personal. These prices have not gone down nearly enough for many of us. Sorry, this is what reality looks like. Remember? I know, it's been a while.

[Fred]

The train keeps on rolling...

[Matt]

It is not surprising that the markets seeing the biggest declines are the very markets that saw the biggest increases for five years straight. Most of these markets had increased in value about 300% since 2000-2001. The fact remains that we have seen a fundamental increase in real estate prices in most all markets that is with us to stay just as increased oil prices are. Scary, as the poor get poorer.

[Rick P.]

I guess "less regulation" in the financial markets, especially when they relate to "sub-prime mortgage-backed securities", is not really a good thing, is it?

[JRG]

It's a good thing; might bring housing prices down to realistic afford ability, not speculation prices. Keep falling.

[David Raether]

Oh, no!

House prices are beginning to head in a direction that makes them afforable for hard-working people who pay their bills on time!

This is terrible news!

Wait...

Okay, I'm back.

I pulled myself together after sobbing bitterly for five minutes that there is a chance that middle class people could eventually afford a house in Los Angeles.

[Mozart]

Zip codes in coastal San Diego have been appreciating for several months now. It's always darkest before the dawn and as San Diego went into this tail spin first, so parts of Los Angeles will also emerge shortly.

Not everyone is meant to own. Median incomes do not necessarily relate to median home prices. The CS report is skewed because it shows a valid, but the whacked state of the current market activity; foreclosures and short sales. Who would sell right now? Only the truely distressed and I bet the non-foreclosure numbers are not nearly as bad as portrayed in the media.

Any home owner who can, will hold onto their property. This crowd may riot but I think there is some overshooting downwards right now. Some places should be cheap because they are terrible places to live.

The bulk of the bubble happened in places that were so cheap that they invited amateur investors to speculate.

[peteviles]

Bruce Webb writes, "Case-Shiller does not in fact track the "20 largest cities" ...

Thanks, Bruce, you are correct, sir. I've fixed the post accordingly. Thanks for pointing that out.

[Raul Garcia]

Mr. Snyder:

Thank you very much for sharing your insight and knowledge.

[nelcisco]

Raul Garcia-
I see your point, Iv'e been wandering for a long time how non-Lakers or non-'A' list actors were surviving in L.A. thats why I left. But I have to correct you, L.A. has become a third world city in culture, not economically,
L.A. by itself is somewhere around 7 or 8 economic powerhouse in the globe, thats huge for one city or even for a county.hardly a third world economy.

[Nancy]

Al Brock,

Not sure about Vegas, but Phoenix gets it's water from the Colorado River (via the Central Arizona Project), which runs through the Eastern side of the state.

In fact, Southern California has been taking advantage of Arizona's water supply for years: http://en.wikipedia.org/wiki/Colorado_River_Aqueduct

[Rando]

Here, Here. I have no idea why this is bad news. EVERYONE said the house prices were going up way too fast, now it's just coming back down to HOPEFULLY a reasonable level. When you make a 150k and can't afford to buy a house, something is wrong.

[Annoyed]

So unbelievable that illegal immigrants and "foreigners" become part of this debate, as if they're the reason why the rich have screwed us all over. Open your eyes and THINK for a change. Blame the right people.

[ken6000]

LA is far from a 3rd world place, as anyone who's recently visited Manila, Lagos, Port-au-Prince or Dhaka can tell you. LA is a world-class, dynamic, thriving city with all that implies. Housing prices here are simply not sustainable at 300 percent increases in a five or ten year period. This is the reckoning for those who looted the inflated equity in their homes and filled their driveways with Hummers, their cabinets with $500 bottles of wine or whatever they did. It is also the reckoning for those who leveraged themselves way beyond logical means to get into those bloated stucco boxes everywhere. Sadly, it is also hitting those who barely could get into a small house in an established area. Those are the people I feel for in this market. Darwinism be damned... go live on a rock somewhere in the middle of the sea if you're unwilling to participate in at least basic compassion for those who are actually getting hit here. I am a homeowner who is not in trouble, still I say, bring the prices down another 20% or so, and we'll see more solid, hard-working people buy homes. Maybe this will shut down the speculative "home as commodity" market... for a few years anyway.

[Jeremy R]

"We continue to make progress in making homes more affordable. Hopefully the trend will continue and lawmakers don't intervene."

Lawmakers should intervene. They should regulate lenders by making them register their mortgage products in the same way that fund managers have to register with the SEC. Mortgage products need something similar to a prospectus. Their should be a national website that explains their mechanisms, risks, advantages, etc.

Also, soliciters should not be able to sell mortgages over the phone unless they give people a federal ID number, and a "prospectus" equivalent. Selling creative/funky refinancing schemes over the phone is like selling garbage bonds over the phone. It is not ethical, and should be heavily regulated.

Also, first time homebuyers with poor credit should be forced to take a 1 hour short online course on risks and money management.

The government should protect people. It shouldnt FORCE banks to require 20% down, it shouldn;t do bailouts or mess with interest rates in silly ways. It should't DIRECTLY control the free-market, but it should regulate it similar to the way the SEC regulates the stock market.

Many people knew what they were doing and got burned, but I am guessing 5-10% really did get burned, and that is not acceptable.

[Jeremy R]

"These prices have not gone down nearly enough for many of us. Sorry, this is what reality looks like. Remember? I know, it's been a while."

I hope SF goes back to 1998 prices. I 4 bedroom unattached home by the beach in SF for 400k sounds quite nice! 1998, Here we GO!!!!

Check zillow in places like Manhattan's East Village or SF's Richmond District circa 1997. You will be shocked. I hope prices come back to those levels!
Sadly, I doubt they will.

[Jeremy R]

Just checked Zillow.

A 1300 sq ft 3 bedroom 2 bath flat in SF, 2 blocks for golden gate park, 4 blocks from the beach was around 290k according to Zillow in 1997.

A very nice 1800 sq ft home on the Venice CANALS was 550k in 1997 (if you havent been to Venice Canals, go check em out)!!

Im sorry. I think homes are way over priced, but I have trouble believing that 1997 prices are ever coming back.

That same house on the Venice canals is selling for 2 million. I don;t think it will go too much below a million. Venice is just a different place now than it was then. There are so many new shops, residents, homes. Big money has relocated to urban areas.

Compton "may" fall to 1997 levels as the immigrants leave CA for AZ, IE, and middle America.

Different areas will drop at different rates, although ALL places will drop.

Median LA prices will probably fall to 2002 levels. Poor areas may go to 1999 prices while wealthy areas go to 2003 prices, and gentrified areas go to 2004 prices (depending on the success of gentrification and neighorhood improvement).

[seabuscuit]

Is it simply NEVER smart to put just 10% down? Does everyone agree that it is still to early to buy?
Seabuscuit

[Jeremy R]

"Is it simply NEVER smart to put just 10% down? Does everyone agree that it is still to early to buy?
Seabuscuit"

Buy in late '09 or later.

I would put 10% down if mortgage companies are willing to give you a respectable loan. Right now, saving markets are doing worse than mortgage interest rates, so 15% down might not be a bad idea. I would keep some of that downpayment in my own cash reserves instead of sticking it in my home loan.

If you are buying a condo, I would wait for a fire sale, or wait a LONG time. You don;t want to buy into an empty building.

[Wilson]

People who doubt prices will go back to 1998 levels need to consider all elements of the economy, not just housing prices.

Of course, if the job market is doing well, and the economy is fine, then there will be a ton of buyers for nice homes in West LA at 1998 prices. But historically, recessions cause great job losses, wage losses, and as a result, there are very few buyers of homes.

A friend, who is a Wall Street retail analyst, says the economy is so much worse than anyone can imagine--it's going to be one heck of a shakeout over the next few years.

Remember, it's all the elements of the economy that will combine to bring prime LA housing to 1998 prices:
--inflation
--high gas & energy prices
--food shortages and price increases
--job losses
--wage losses

[Laker]

Mozart wrote ,"...I bet the non-foreclosure numbers are not nearly as bad as portrayed in the media..."

The non-foreclosure number basically do not exist. They are NOT selling right now. The regular seller are simply waiting it out...hoping that prices will rebound and they could sell then.
I've heard some economists saying that if you need to sell your house in the next two years, now is actually the best time to do that. That is in the next 2-3 year prices will be sure less than today, and therefore sellers can get more dollars today than tomorrow.
I know it feels bad to get 20% less than what you could get last year for your house....however, it is much better than 40% less that you will get next year....
Sometimes it is better to get one bird in your hand than three on the tree....

btw: Where is shockg????? Hope everything is fine with him

[Rocker]

The amazing thing is, why so many people got it so wrong for so long time: home buyers, realtors, brokers, rating agencies analysts, global investors and goverment officials?!?

As a grown up, I'm embarrased to try to explain this to my 4th grader daugther, she's good in math and can understand all the math involved here.

We the bears at some point in time (2002-2004) were the 0.01% thinking and acting with the firm idea that RE was out of touch.

[Rocker]

In late 90's, some areas 1998 nominal prices = 1989 nominal prices.

We won't see the same nominal prices but probably some areas (really bad locations) probably will see 1989 real prices.

With al the inflation that we have had in the last years, currently we're at 2003 prices in real terms, according to calculated risk blog.

[Westside Bubble]

Graph of the latest Los Angeles Case-Shiller is at
http://westside-bubble.blogspot.com/
2008/05/march-case-shiller.html .

[Rocker]

The time to buy will be when you go to any group of Californios in a public area, and say:
"What do you guys think about buying a house in SoCal? Is it a good time to invest in RE?

If you see grown men that start to cry like a little girls, that is the signal that is the right time to buy.

[nelcisco]

Median L.A. prices will probably fall to 2002 levels
Jeremy R.

Why wouldn't they drop any further? this bubble came about in '02, scam financincing as I call it started around that time, the average person in '02 would'nt have been able to afford a house then if we had today's guidlines.
I'm sorry I think the median prices will go down to around 1999 prices and poor areas to 1994 prices. think about it, poor people still make $10 an hour

[some investor guy]

21.7% drop thru March. It's more by now. CS is looking at data on average 2.5 months old, relating to sales contracts entered into 3.5-4.5 months ago.

The drop is already considerably bigger.

[Aldo818]

Why do some people blame illegal aliens for this bubble?
I doubt that they were responsible. On the other hand there does seem to be more of a correlation to to illegal aliens and the price of our foods (keeping them somewhat low).
I agree that they do suck out a bit of our system but It can't be anywhere as much as what we save by their work that no one else is ready to do.

Just my observation. But I could be wrong.

[srla]

If anyone really wants to know where prices are headed, check out this graph: http://www.latimes.com/media/thumbnails/
graphic/2008-05/39300032-27100540.gif, then check out this other graph: http://www.oftwominds.com/blog-photos/japan-
bust1a.jpg. The second graph of Japanese real estate prices over the past 25 years is close to the shape of a typical bubble graph. So far, LA's housing prices are following almost the exact same pattern.

Of course, I am sure a graph of oil prices since 2006 would show a very similar pattern. (Anyone think it's a coincidence that oil prices began to skyrocket at the precise time housing prices began to decline?) Looks like those brilliant hedge fund managers have found a new place to dump their money.

[Raul Garcia]

For those who replied to my post, saying L.A. is not a third world economy, you need to get out more.

There is a huge discrepancy in income levels, and in all reality L.A. has become a Master/Servant society because of it.

Don't be fooled by the numbers, that's what they are intended for in the first place.

[new_to_socal]

Hi Folks,
I have been following the discussion here on this blog for a few weeks now as I am new to OC/LA area and thinking about buying a house. My realtor tells me that inventory in Huntington Beach is less than 2 months and that last year same time it was close to 5-6 months. Therefore, there are more offers for each house and *gasp*, it is close to becoming a seller's market. I am pretty skeptical about this and I am not able to reconcile her opinion with headlines like today's. I know there have been lots of discussion about the Westside here, any thoughts about Huntington Beach, inventory there, how the beach markets have fared etc? Thanks. And appreciate the generally good discussion and posts here.

Regards,
New_to_Socal

[Fred]

New_to_Socal. Don't try to reconcile her spin with the facts. Huntington Beach prices are not sustainable. There are 3 things to look at: price-to-income ratio, price-to-rent ratio, and credit availability. All are in dire straits right now. Go to zillow.com, type in a Huntington Beach address, go down to the graph at the bottom, and see what it was worth in 2001. That is the last time all three of the aforementioned factors were "normal." If you buy now you will lose a catastrophic amount of money.

[Laker]

Rocker wrote: "...We won't see the same nominal prices but probably some areas (really bad locations) probably will see 1989 real prices...."
Rocker,
Some nice areas in the valley (Tarzana) are now selling for LESS than they sold in 1989 in real terms. I plugged in a property that was sold for $400,000 back in 1989 to inflation calculator and found that this place should cost today about $800,000. However, this house sold two months ago for $700,000....So that is 20 years and house did not keep up with inflation !!!!!!!!!!! It is actually less(real dollars) than that peak price !!!!!!

srla wrote: "...So far, LA's housing prices are following almost the exact same pattern..."
srla, if you look at the japan graph you will notice that the "down" slope was "smaller" or "slower than the "up" slope. HOWEVER, if you look at CS index for LA, you will easily notice that the down is actually going "FASTER" than the "UP". That means our correction / price discovery is going to happen much faster than 15 year which is a good thing for the economy. Give it another year, and LA will correct another 20-25%. That will be about 0.22x0.25 => reductions of 0.78 in first tear and 0.75 in second year to sum to about 0.58. Pretty much the needed correction to bring prices to incomes ratios for LA. Note: that will not be 2X but more like 3.5-4X

[wayat heminit]

New to Socal,
Why would a realtor lie to you? Trust your gut.
Wayat

[E]

Silly people...throw out that "inflation adjusted" term for housing prices.

Housing goes up with incomes.

Incomes have not kept up with inflation.

Basic necessities (food/fuel) take up a larger chunk of disposable income...meaning...*even less to spend on a mortgage.

In summary...over the long time..."inflation adjusted" housing prices wouldn't have been sustainable. The bubble just sped things up.

[tarbubble]

Laker, shockg will pop in and insult all of us who want prices to continue declining, then try to make us feel panicky because by waiting we might miss the boat when prices increase drastically and rapidly again. as if that will happen. let him stick to his guns, it's kind of amusing. he rants on the OC Register's real estate blog, too.

[tarbubble]

Laker, shockg will pop in and insult all of us who want prices to continue declining, then try to make us feel panicky because by waiting we might miss the boat when prices increase drastically and rapidly again. as if that will happen. let him stick to his guns, it's kind of amusing. he rants on the OC Register's real estate blog, too.

[Kathy]

new_to_socal: assuming you are legit, it looks like your realtor friend is pulling a fast one. Check out the 42 pages of HB foreclosures at trulia.com

[Joseph C]

Hmm, so the median home prices stay high enough that the median income people can't afford to live in L.A...

If this keep up, eventually those priced out of L.A. will leave and bring the median income up. At the same time, the lowered demand will bring the median house prices down...

I think L.A. will be like N.Y.C. -- most people simply won't be able to buy -- only those who bought a long time ago or the very well off will buy. And everyone else will hang on to their (hopefully) affordable rentals!

[shockg]

"Laker, shockg will pop in and insult all of us who want prices to continue declining, then try to make us feel panicky because by waiting we might miss the boat when prices increase drastically and rapidly again. as if that will happen. let him stick to his guns, it's kind of amusing. he rants on the OC Register's real estate blog, too.

Posted by: tarbubble | May 27, 2008 at 05:22 PM "

Another speculator who bet his home on this "crash".

[shockg]

Some nice areas in the valley (Tarzana) are now selling for LESS than they sold in 1989 in real terms. I plugged in a property that was sold for $400,000 back in 1989 to inflation calculator and found that this place should cost today about $800,000. However, this house sold two months ago for $700,000....So that is 20 years and house did not keep up with inflation !!!!!!!!!!! It is actually less(real dollars) than that peak price !!!!!!

Another cherry-picked example from Lakers very own bubble blog. Big surprise.

[Arti]

This is only the beginning. No one is going to buy until prices come down HARD, especially in West LA where they went up year after year and they're still untouched. No, they have to come down another 20, 40% before we even think of buying again, especially in West LA. Those prices were fantasy.

[the bitter renter]

Well, the Air Quality Management District isn't helping things out much with their new map. I always thought the air was better on the Westside. Turns out, it's still pretty cancerous.

See for yourself at the link below.

http://www2.aqmd.gov/webappl/matesiii/

[Nick]

To New_to_Socal:

RE agents are going to be biased, and tend to interpret the data in the way most favorable to them. I have been to many open houses in the LA area in the last few months (just getting a feel for RE, not looking to buy), and have yet to meet a RE agent who doesn't think now is a good time to buy (in whatever area they are selling in).

As for buying now, I would first ask yourself if you're qualified to buy now. I wrote a handy-dandy reference blog post on that a bit ago you might want to check:
http://itsjustmyopinionicouldbewrong.blogspot.com/
2008/04/psa-for-people-considering-re-purchases.html

If you can afford to buy, consider if it's worth it for you, what time-frame you have, and what cost you could live with. I would take your realtor's optimism with a large chunk of salt, though (or ignore it completely in your investment analysis).

[Jeremy R]

"People who doubt prices will go back to 1998 levels need to consider all elements of the economy, not just housing prices."

Well hey, that means I get to move to 3/2 in SF for 300k, or get a huge home on the Venice canals for 500k. Better yet, I can move to large 2 bedroom condo in Manhattan's chic East Village for 300k.

All elements considered, I HOPE and pray you are right because I would kill to live in either Venice Canals, SF's sunset, or Manhattan's East Village!

[Jeremy R]

"

For those who replied to my post, saying L.A. is not a third world economy, you need to get out more.

There is a huge discrepancy in income levels, and in all reality L.A. has become a Master/Servant society because of it.

Don't be fooled by the numbers, that's what they are intended for in the first place.
"

You are going a bit far. LA metro has the mega wealthy (50 billionares), the pretty wealthy (400,000 millionaires in LA/OC), the well off, probably 1-2 million people in families that earn over 100k/yr, probably 3 million make between 50k-100k/yr and the rest, who knows. That is in the 13 million county area.

A true third world country is 50 mega wealthy, and then 12.9 milllion making under 10k.

I am not splitting hairs either. LA has a shrinking middle class, as does NYC and the SF Bay Area. Look at SF's tenderloin, mission, hunters point, bayview areas, then go to St francis woods and pac heights. LA is not the only city where this is happening. Add London and Paris to the list. LA in fact has MORE middle class people than NYC or SF. Sure, LA's middle class isn't like the middle class in small city like Portland, but they are still middle class.

[JK]

Aldo and Annoyed,

The illegals weren't responsible for making the subprime loans (although many recieved them), HOWEVER, you are both seriously dreaming if you don't think the illegals have had a huge negative effect on the housing market in Los Angeles. They are the main reason the middle class is fleeing the city. The schools are overrun with their children, (there was an article today that reported that 5 of 98 Middle schools in Los Angeles met minimum academic standards) the streets are more dangerous with their teenage gangbangers, the emergency rooms have closed from delivering their anchor babies, and wages have been depressed by their very presence.

Many people are getting tired of paying taxes for schools they can no longer send their children to and having their neighborhoods turned into Tijuana slums 6 months after the first illegal alien familiy moves in. The LA times ran a story the other day about the Mexicans turning LA into what looks like Mexico with their chickens, goats and pigs running around the streets of LA city neighborhoods! Guess what this does to property values in the area?

Whites fled LA to get away from Blacks and now Blacks are fleeing to get away from the Mexicans. Whites will soon flee the Inland Empire as more and more Blacks look for areas that at least resemble America at a reasonable price. This will put more upward pressure on safer areas as everyone looks for somewhere safe they can afford. That pie gets smaller every year as the illegal alien population grows.

They suck a little more than "a bit" from our system. They have made many parts of Los Angeles unlivable. What we pay for food doesn't come close to what the illegals have cost the State of California. Many people would gladly pay extra if they could go back to the days of yore.

Please save your racism arguments... it lost its effect on me years ago. Political correctness has prevented people from speaking the cold hard truth. I blame our politicans more than the illegals themselves, but to say they are not at least partly responsible for the housing situation is just plain silly.

[sandiegan]

What's this 300% rise baloney people post about here?

DQ NEWS:
San Diego Median March 2000: $230K
San Diego Median March 2008: $395K

That's a 71% rise in 8 years.

That's 7% YOY growth.
Solid. But hardly phenomenal.

[Monkey King]

JK (and all of "them" who ad nauseum state the same argument)

I ask you to all please quantify the source data of your statement.

What percentage of foreclosures are by illegal immigrants?

Easy question... Just a percentage.

Or are your arguments baseless personal opinions not based on fact but based instead on... racism?

[Laker]

schockg wrote: "...cherry-picked example from Lakers very own bubble blog. Big surprise...."

Shockg, this is not cherry picking. I'm talking about prime tarzana melody acres area. 95% of the properties are now selling for LESS than they sold in 1988-1990 in real terms.

[tarbubble]

Another speculator who bet his home on this "crash".

Posted by: shockg | May 27, 2008 at 07:00 PM

oh shock, you're wrong in at least two different ways.

correction #1: i bought a townhouse at the very beginning of the bubble (early 2002) and still own it. i have rental parity in it, so no worries. BUT i'd love to own a detached SFR and i have all the time in the world to wait for prices to come back to reasonable levels (i'll settle for 2003 or 2002 pricing). prices in my area are still dropping - we just broke the $400k barrier and prices are still getting slashed. i know what neighborhoods i want to be in and i check them daily.

correction #2: i'm a girl. was i at least right about your gender? you boys do love to argue. it's very entertaining.

[Laker]

sandiegan : "...What's this 300% rise baloney people post about here?..."
sandiegan ,
6130 MELVIN AVE TARZANA, CA 91356
Sold Jan 24, 1996 $170,000
Sold May 01, 2006 $1,000,000

That is 10 years and price went up $830,000 or 5.88 times that it 588%
Again 588%

[Nelcisco]

WOW, JK talking about keeping it real.

you'd be suprised how many people feel the same as you, as a hispanic male (Puerto Rican) I can say that although this country was built by immigrants ...LEGAL immigrants, my parents left PR and went to New York, they were citizens technicaly but didn't speak english & learned it, my dad died with the newyorican spanglish accent, but they were proud americans, adapted to the American way, my folks didn't bring pigs or rosters for cock fighting on Lexington Av in Manhattan. But that was in 1949, a bygone era. Unfortunately political correctness has destroyed our outlook on truths and our city is unrecognizable from just 20yrs ago.

Thats what I really ment on my earlier comments about L.A. being a 3rd world culturally and socially, but not economically. Economically, 7th to 8th in the world

[Mr. T]

Good! Crash and burn!

My war chest is chock-full of euros waiting to buy ALL of Los Angeles for $2 in a couple years...

LIFE IS GOOD.

[househunting]

New_to_Socal:

Your realtor told you HB is close to being a "seller's market"?? Is her name L!ly by any chance?? Well, I guess if he/she said, "Wait! Don't buy!" that would weird.

I've been watching HB since last year when prices started to come down there, and with each month prices have dropped... and are still dropping. Depending on the size and location you want, I've seen the inventory hover around 1,200 "active" properties in HB, and each month there are more foreclosures. If you want to research the market, you can watch the inventory, price drops, and actives at realty.fatwalletdeals.com/overview
and watch for all the UPCOMING inventory at foreclosureradar.com

The inventory usually comes down in the spring (like right now) as that is when most people are out buying to move during summer vacation when kids are out of school. This spring I think the only people buying are those that HAVE to because of kids, schools, etc.. But after summer the inventory climbs again because people usually aren't buying as much. Unless you've got kids who need to be in a certain school by fall there's probably no reason to feel rushed.

My realtor and mortgage broker both told me "not to be in a hurry" right now... but then again they are both good friends of mine and I know I can trust them.

If you find a house that is PERFECT and you MUST have it and you can afford the payments without issues, buy whenever. If money is an issue and you might have buyer's remorse if the values go down more this winter and next year, wait.

[Pasadena]

JK:

Don't be an idiot. Pick up a history book. Mexicans have always been in LA. But go ahead and ignore that fact. I agree lets drop the PC and I don't care if you are a racist. I love honesty --- So are you telling me that Mexicans are to blame for your own personal failures. They are the reason why you are not wealthy and didn't go to an ivy league school. Mexicans are the reason why you never were able to accomplish your goals, they are the reason why you got a low SAT score, why you couldn't get a job in "the industry."

Keep living in a world where everyone else is the blame for your own personal failures in life.

My point is that if you were more of a success in life, you wouldn't be so affected by them because you'd have enough money to buy a house on the hill and put your kids in all white private schools.

I say we kick guys like you out of the country and make room for people who actually have a drive to succeed.

[JK]

Monkey King, the illegals can have zero foreclosures. What does that have to do with the negative impact they have had on the Los Angeles housing market and on the city itself? Try to follow the argument will ya...

[JK]

Pasadena, Mexicans have nothing to do with any personal failures I may have. I left Los Angeles years ago and we don't have a problem in my neighborhood. My point is, are we supposed to allow the illegals to overun any people that have not made enough money to live on the "Westside" and send their kids to private White schools?

And save your personal attacks. I do fine in life. And if I were in that wealthy upper 1% I wouldn't harbor that "let them eat cake" attitude about the other 99%.

Your comments were disgusting.

[JK]

Nelcisco, I know I'm not alone. I just feel bad for middle class Americans who have no one to represent them. Their politicians have been bought off by the "elites" who have shipped their jobs overseas, hired illegals to do the jobs that were left and told them it is their fault that they couldn't afford a better lifestyle on the coveted "Westside". We are getting a bit off topic here but I just wish these people had a way of making their voices heard.

[yours truly, Johnny Dollar]

Just when I thought...
living in my car may be an option,
our favourite Shell gas station at
the Main Street exit on I-10 in
Cabazon yesterday had 87 octane
posted at $5.05 point 9.
Aberration? (Not so fast, my friend).
Three weeks ago, this Shell station
was the leader of the pack with a
posted price of $4.39 (point 9).
Where will other stations' prices
be three weeks from yesterday?

[Foisterryanlac]

Well we're almost half way there- good news for us mere mortals. Look at the link below and you will see
that the westside and other wealthy communities are
going to drop just the same, it's just that wealthier areas didn't do as much subprime but rather took out more ARMs. Those loans had a different reset schedule and just as the subprime reset wave ends at the end of 2009 they begin their resets, in just as big a wave. Really, look at the graph if you want to understand what's ahead.

http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7
EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg

[Annoyed]

JK,
By "middle class Americans," I assume you mean white middle class Americans. Our family came here with nothing and now enjoy a comfortable life. Even with our wealth, I would NOT want my kids going to an all white private school. Isolation breeds ignorance. We all want to live in safe, clean neighborhoods. But obviously, your idea of safe and clean is white.

[solvent]

JK -

I want to know what college you went to so I can make sure I don't send my kids to whatever institution it was that taught you to think that scapegoating is an acceptable substitute for quantifiable, well-reasoned and supportable argument.

To paint all people of a particular race/ethnicity with such broad brush strokes is just plain stupid and sickening.

[Raul Garcia]

Jeremy:

Where is the data to back up your numbers, and what about the rest of us?

[JK]

Annoyed, I didn't say safe and clean meant White. I was using Pasadena's words. Sorry for the misunderstanding. My idea of safe and clean is just that; no matter the color of people attending the school. I was focusing in on the performance of the schools themselves.

As far as the nieghborhood, I'm more concerned with the fact the the city of LA has been turned into a third world slum in only a couple of years and political correctness has everyone puting on blinders and pretending nothing is happening. I'm done with the argument though. None of us are going to change each others' minds.

[victor knopp]

mr viles,even you must admit that this experment has turned into a sad rubber neaking blog filled with itoldyousos your talents would be better utilized in a more productive area,stick a fork in it please,the market has long since been cooked,thank you

[DSL]

JK Said:
"The illegals weren't responsible for making the subprime loans (although many recieved them), HOWEVER, you are both seriously dreaming if you don't think the illegals have had a huge negative effect on the housing market in Los Angeles. They are the main reason the middle class is fleeing the city. The schools are overrun with their children, (there was an article today that reported that 5 of 98 Middle schools in Los Angeles met minimum academic standards) the streets are more dangerous with their teenage gangbangers, the emergency rooms have closed from delivering their anchor babies, and wages have been depressed by their very presence.
Many people are getting tired of paying taxes for schools they can no longer send their children to and having their neighborhoods turned into Tijuana slums 6 months after the first illegal alien familiy moves in. The LA times ran a story the other day about the Mexicans turning LA into what looks like Mexico with their chickens, goats and pigs running around the streets of LA city neighborhoods! Guess what this does to property values in the area?
Whites fled LA to get away from Blacks and now Blacks are fleeing to get away from the Mexicans. Whites will soon flee the Inland Empire as more and more Blacks look for areas that at least resemble America at a reasonable price. This will put more upward pressure on safer areas as everyone looks for somewhere safe they can afford. That pie gets smaller every year as the illegal alien population grows.
They suck a little more than "a bit" from our system. They have made many parts of Los Angeles unlivable. What we pay for food doesn't come close to what the illegals have cost the State of California. Many people would gladly pay extra if they could go back to the days of yore.
Please save your racism arguments... it lost its effect on me years ago. Political correctness has prevented people from speaking the cold hard truth. I blame our politicans more than the illegals themselves, but to say they are not at least partly responsible for the housing situation is just plain silly."

What exactly are Pasadena, Aldo, and Annoyed arguing about-slash-angry about? JK is largely correct and there are lots of us who agree with him. If you don't think the illegal invasion has had a huge negative impact on life in Los Angeles in the past 30 years you folks are flat out blind. Keep positing your tired PC arguments and bury your collective heads in the sand that there is no issue and that you really aren't paying to birth, house, clothe, educate, and feed the children of people who overtly break our laws and gleefully abuse our broken federal support system.

[Come On Now]

Some of you doom and gloom angry renters are just funny. Sure, it sucks that you are priced out of the market and really want to own, who wouldn't? Which probably justifies all of your stat spinning and insistence that homeowners are all "greedy." But in reality, the prices on the westside are never going to get down to a level that most of you can afford anyway. All of these numbers about LA being down significantly generally apply to the non-westside areas; places like Brentwood, Bel Air, Santa Monica, Beverly Hills might come down a bit but will in no way plummet like some of you hope, there are just way too many people from all over who want to live on the westside. There is an abundance of wealthy folks who live on the westside who are pretty much unaffected by all of the factors that a lot of you consider as being back-breaking like high gas prices, inflation, potential job losses, etc. That stuff just doesn't factor in for a lot of us on the westside making more than 350k. Do you have any idea how many people in the industry, doctors, lawyers, agents, actors, musicians, producers, directors, etc., make per year? And there are a lot of us, all of whom want to live on the westside. So as much as I understand your analyses regarding other areas of LA, be assured that the westside will hold strong and will not plummet, which doesn't matter anyway because some people just weren't meant to live there anyway. Sorry to burst your bubble but a reality check is in order.

[tealeaf]

Sure the westside will always be more expensive than the surrounding areas, and if the incomes support the price level, I would agree with the premium.

Funny how so many people can afford and want to live there, yet the NODs are starting to stack up.

81 NODs or foreclosures filed out of the 285 homes listed on Trulia:
http://www.trulia.com/CA/Santa_Monica/
#for_sale/Santa_Monica,CA/foreclosure_lt/

Come On Now: here's one to remember: it all happens on the margin.

[shockg]

Hey Teabag, you and everyone else want to own property on the westside. Not gonna happen. Keep dreaming.

[tealeaf]

shock 'permabull' g: open the list of NODs, close your eyes, cover your ears, repeat "leading indicators are meaningless" and "sacred ground" 5x. Ahhh. Feels better now, doesn't it?

reread my post - i agreed with the premium.