L.A.-area home prices are down, down, down (Are you surprised?)

Prices in Los Angeles and Orange Counties dropped 34% from October 2007 to October 2008, according to the Standard & Poors/Case Shiller Index released this morning.

The worst declines were among homes priced lower than $351,000, which lost 39% of value during the year. Those same homes have lost 46% of their value since the bubble's peak in 2006.

Higher priced homes, by comparison, have lost 24% since 2006.

-- David Pierson

Comments

[Tim K.]

Only thing surprising is just how thoroughly bearish the mainstream media has been lately. It's a breath of fresh air compared to all the breathless "oh-goody-houses-are-going-up" jabber of the last few years.

2009 is going to be *great* for savers who are waiting to buy a home. 2011 even better!

[CompaJD]

Sellers who price their homes over $351,000 are delusional.

[Rational Renter]

Sadly, there's not even anything left to argue about. All the housing Polly-Annas have disappeared into the woodwork. It's a little bit of a relief, but also a little depressing. It's not fun being proven right when it means so much pain for so many.

[Mr.Bilko]

Westside prices are down but still sky high and out of proportion to household incomes. The reason the sub $351K homes are taking a beating is because many of those homes were funded using no documentation loans by people who did not make the income that they claimed. You may thank WaMu for that.

[Brian]

first?

Since Peter has gone does anyone care?

[Dan]

$351k is the price now or it was the price at its peak?

[Pete Viles]

The best insight I've seen lately on LA home prices came from an MLS ad in the print editon of the Times recently. The ad showed that median sales prices in the vast area from downtown to the ocean were down about 10-12% from year-earlier levels. This is about what I see on the West Side -- prices down about 10-15% from peak for nicer homes.

The 30-40% declines take in the entire county or the metro area -- including neighborhoods where waves of foreclosures are driving prices lower and sales higher. There aren't many of those neighborhoods from downtown to the beach.

I still don't see the big price declines in more established, pricier neighborhoods. Not saying it won't happen, just saying I'm not seeing it yet.

And note that the federal government successfully drove conforming mortgage rates below 5% recently, and gives every indication it will continue to drive mortgage rates lowe to support the housing market.

[Laker]

lower end dropped 46% from peak, higher end dropped 24% from peak.....

That is the main reason not to touch any "high end" property...Anyone that buys "high end" property will be guaranteed to lose at least 25-30% of his money. "high end" is still super inflated.
I refer to "high end" as $700,000-1.3M homes.

[brian]

Dave,

Just because a comment is negative (i.e. this blog is horrible and has no readership since Peter Viles has left) is not a valid reason to censor it. This blog, just like the paper in which it appears, is a sinking ship.

Pandering to the left wing by the Times is obivous failure. It is time for the Times to fairly and accurately report all news. Instead of refusing to post negative comments, maybe you should embrace them and try to find out why Peter was so successful.

Brian

P.S. I just deleted this blog from my favorites.

[Waiting on the Westside]

Do we think the percentage drop will be the same across all price ranges? (And it's just taking longer for the higher priced homes to drop?) Or are higher end homes likely to retain more of their albeit inflated value?

[Steve]

if is Financial and also the quality of life in SoCal has declined so much there is a major exoudus. Get real ,there better place to live and at much lower cost. LA is the most over rated over priced dump in the world.

[bkl]

My personal history of two houses:
1996 low price = 200k, high price 500k.
2006 low price = 700k, high price 1100k.

Gain from 1996 to high point:
the low priced home gained 250%; the high priced home gained 120%.

If prices drop back to 1996 prices, the drop from peak will be
low price = 71% drop, high price = 54% drop.

The higher priced home won't drop as much as the lower priced home because it didn't go up as much during the boom.

[latesummer2009]

As Laker points out, the high-end pays its dues in 2009...

http://www.westsideremeltdown.blogspot.com

[DF]

Waiting on the Westside:

This is the question we're all asking. One piece of evidence that higher-end properties will eventually see sharper declines is that the initial wave of foreclosures that we're just getting through was mostly due to subprime mortgages, which are mostly means of financing houses in outlying or marginal areas.

However, there is a lot of good evidence that there will be another foreclosure crisis related to alt-A mortgages, and those will affect all homes, not only marginal ones. If this prediction is true, it means we'll likely see precipitous declines in even affluent areas like the Westside.

Another fact to consider is that in previous housing bubbles, all areas were affected equally, although the trends started from outlying areas and took some time to work into higher-end ones. If this historical trend holds true this time around (and I suspect it will), then more declines (and sharper ones) are forthcoming throughout the LA area.

Of course, if the Feds get involved with a massive bailout or microscopically low rates, anything could happen.

[Jose]

What happened to Peter?

[k2polo]

Out here in the Palm Springs area..and mostly the Eastern Valley, amazing price drops. 50% isn't even that bad! It is definately neighborhood by neighborhood, but the nice locations with homes that used to be $400-500,000 and are not at $150,000 to $250,000 are selling. I am starting to see the golf course communities with homes that sold 3 to 6 years ago in the range of $800 to 1.3M become really shaky. REO's are actually sitting long enough to have to be reduced. I believe the prices will continue to fall in the upper price ranges until they too are at about 50% of original PP. Not a bad thing since that would put them where they should have been in the beginning!

[150 multiple choice questions]

Lowering rates will do something in the range from nothing to make it worse. It will in no way shape of form stop the falling prices at any price point.

[Brad Correll]

Not surprised at all. Too many people with not qualified to have a mortgage equals massive foreclosures. It will take until at least 2010 to cycle through this downturn.

[golfproz]

The prices didn't all go up at the same time. But they all went up a similar amount. It's the same on the way down. They are not all coming down at the same time. But the declines will be the same in the long run. For some reason the Westenders seem to think they have a price anti-gravity machine. The Pacific Northwest hasn't fallen much yet either...so what. They just have a little more helium in their balloon.

[anony]

What I've seen of Westside SFR sales between June and December of 2008, very few were REO sales (2 out of 10). I am talking about SFR sales price range from $700,000 and up. Those areas are usually well maintained and may have better school district.

Another observation is that the number of homes sold between June and Dec, good areas had a LOT FEWER than areas with 35% to 50% sales being bank foreclosures and REO.

It's hard to gauge how many homeowners in the good westside areas have risky home loans or risky equity line of credit, how many have been using their primary residence as an ATM card, how many are in danger of losing one or both household incomes, how many pending divorces, how many job transfers, and how many are about to kick the bucket or about to retire and move away from Westside.

As an appraiser working in the westside, I can't tell you how well the price will hold in the westside in 2009. It will drop but probably not a huge drop if the foreclosures and short sales are not going up and there are buyers able to get jumbo loans.

As for the not so good areas.....it's a sure bet that the price decline will continue...not in a small way....

Hi Peter, if you are checking, wishing you and your family a very swell 2009!

[Drew]

All of you purveyors of gloom & doom are funny to me.

Have a happy and healthy new year, y'all!

[problemwithcaring]

hey mr Drew Im-too-good-to-rent-in-LA:
happy new year to you &ur lil family too! im prayin for yall!
and everybody that bout a house n pasedena &east la in the second quarter of 2008.
please keep posting, Too-Good. your the only thing worth reading here since...well...you know....

[Drew]

Sorry "problemwithcaring" -- go back to your little boy "radical commie" blogpost and let the adults play in the real world.

I'll be praying for you too, that someday you'll have the wherewithal to afford to live in a nice place and not have to worry about scrounging for rent money every month.

Would you like me to have you over for tea someday soon? You seem to have a bit of the stalker in you -- which is also funny to me....