As always, you folks ask great questions. I apologize in advance for not answering them all. Feel free to answer those that I don't -- you can go back into the original post (link here) and offer your answers. That said, some Q and A:
These are the dog days of August. I detect a lull in the conversational buzz on the blog. So, in the transparent hope of spicing things up a bit, I offer another installment of "Ask the blogger," known here as "Ask Pete."
Use the comment section below to submit your questions about L.A. real estate, housing news, media, blogging, statistics, etc. As is my custom, I will pick the easiest questions. I'll answer them here by midmorning tomorrow.
-- Peter Viles
Photo: An Italian-style Villa in Hermosa Beach, featured recently as the L.A. Times' "Home of the Week." Credit: Chase Lindberg
You asked some good questions, as always. I'll answer the easy ones.
Jackie at 2:38 asks, "Is it possible that even though foreclosures are skyrocketing and prices are plummetting, some neighborhoods (I guess you could call them the better ones) are still competitive when it comes to buying?"
Yes, definitely. What I sense in "better" (more expensive) neighborhoods is that even though prices have softened, it's still common to see multiple offers for good houses in move-in condition.
EG at 2:38 asks, "What are the chances of an 'overcorrection' downward?
Very good in the hardest-hit areas. That said, it's hard to define an overcorrection. Is that when prices fall below market values? No, because the market value and the price are pretty much the same thing. But I think I know what you mean -- in the downturn, prices will fall to a point below what buyers will later decide is a fair price. I think that will happen in some areas.
IToldu2CashOut at 2:49 asks, "What do you see happening with downtown real estate in the next few years? Where you aware of the how the Chapman Flats condos (now rentals) had been misrepresenting square footage? I feel downtown apartments are nice but grossly overpriced for the state of redevelopment, do you agree?"
I'd put downtown somewhere in the middle of the market -- it won't suffer as much as foreclosure hot spots, but will lose more value, on a percentage basis, than established neighborhoods. I was not aware of a controversy over Chapman Flats. I agree that prices downtown are on the high side -- but then I feel that way about L.A. in general.
Candice at 2:57 asks, "What do you think will happen to Countrywide? Relatedly, Greginthevalley at 3:35 asks, Do you think BofA will complete the Countrywide merger given the enormous downside?" (click below for the answer to this, and more questions)
What is the third in the series called? The threequel? Whatever, "Ask Pete" is back, your biweekly chance to pose questions to the blogger.
You know the drill: Use the comment section to ask questions about real estate, the housing market, the news business, the blog, etc. You ask them, I answer the easy ones. Get your questions in by 4 p.m. today, I'll publish answers by 6 p.m.
See previous Ask Pete columns here (#1), and here (#2).
Photo Credit: Getty Images.
You folks asked some good questions. As is my custom, I'll answer the easy ones:
1) Mike at 12:55 pm asked, " why do you sometimes post in 5 minutes and sometimes in 3 hours??"
Thanks, Mike. If I am sitting at the computer at work and doing nothing else, I post comments very quickly. If it is 7 p.m. and my 4-year-old son yells at me, "DADDY! Turn OFF the computer, let's play baseball!" Then I turn off the computer and play tee-ball in the back yard. Seriously, it's just me moderating comments. I have other duties at The Times, and in life.
2) Uncle Billy at 12:56 p.m. asked, "Did you have an inkling of how different our real estate market would become when you started this blog?"
Thanks, U.B. I thought the market would weaken, but not this quickly, and not this unevenly. I did not see the collapse in the mortgage industry coming. I would have guessed prices in better neighborhoods would be lower right now.
Back by popular demand: Monday afternoon ask-the-blogger Q & A. You ask the questions, I pick the easy ones and answer them on the blog later today.
So bring 'em on: Questions about the L.A. housing market, the economy, the news media, etc.
Ground rules: Submit your questions in the comment section by 3 p.m., I'll answer 10 or 12 of them by 5 p.m. today.
Photo credit: Los Angeles Times
You folks asked a bunch of good questions, thanks. I'll answer the easy ones:
1) Dave from Huntington Beach: "My mom is 60 and still working as a physician. She sold when the market was low several years ago (back in the '90s) and never was able to get back into the market. We think she should buy right now when prices are low so that she has a place to retire in 5-10 years. Do you think that's a good idea?"
Pete: If she finds a house she really likes that she can afford, and losing some equity won't bother her, buy it. Otherwise, no rush. It's a buyer's market and getting more so. Prices are still falling. She'll get a better deal a year from now.
2) DSL: "I don't see any price drops in any desirable San Gabriel valley suburb (San Marino, South Pasadena, or desirable areas of Pasadena and N. San Gabriel). Where is the huge price correction all of your readers keep yelling about?"
Pete: The huge price correction is in lower-income areas where there were lots of first-time buyers, sub-prime loans, and new construction. My guess is more established, upper-income neighborhoods with good schools and stable homeownership will continue to outperform the market -- but prices will slip eventually.
3) Nathan Wood: "Given the current housing market, do you think we could see from the peak to the bottom an 80 percent decrease in housing prices to more normative levels based upon workers earning power?"
Pete: No.
4) Wilson: "If a broad bailout is passed and every defaulting homeowner is given a principal reduction, would you join a growing movement of folks who will intentionally default on their mortgage in order to receive a principal reduction?"
Pete: No, but it makes sense that lots of homeowners would deliberately miss a few payments to get into a cheaper mortage. I wouldn't do it because I don't have a mortgage, and even if I did, my wife and I take our credit scores seriously.
5) D: "Break out your crystal ball Mr. Viles. How long do you think the downturn will last and how low will it go?"
I spend my days and many nights bloviating here about things I think you need to know, and raising the questions I think need to be raised. It's all very command and control, if you think about it.
My boss, Tony Pierce, suggested I turn the tables for a few hours and let you ask the questions -- about real estate, the economy, the news media. You set the agenda.
So here goes: Ask the blogger. Your questions, my answers.
Get those questions in by 4:30 p.m., and I'll answer them by 5:30 p.m.
Photo Credit: Warren Christopher's house in Beverly Hills (just listed for $3.25 million), by Bary Brooks.
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A: Continued price declines in Los Angeles County for most of 2009, probably the entire year. At least one more federal economic stimulus program, and a major federal effort to increase mortgage lending, likely through a S&L-type bailout that takes bad debt off the banks' books.
Q: Larry asks, "You keep stating in this blog that this real estate cycle is different. Is it possible that the long term impact could be massive declines in less affluent outlying areas and a permanent escalation in the Santa monica / Beverly Hills central city areas? ... It would make this city resemble the cities of the developing world with rich enclaves..."
A: Great question. I call this the "Blade Runner" scenario and I hate to say it, but I definitely think it's possible. I'm a believer in the Lou Dobbs theory that the American middle class is under economic assault and the result is a bigger gap between the haves and the have-nots. For what it's worth, economist Chris Thornberg, a pretty smart guy, does not see a "permanent escalation" in home prices in wealthier neighborhoods -- he believes those markets will crumble too.
Q: MarkW asks, "In the areas like the IE that are seeing increased sales, who is buying? Is it first time buyers, investors, people retiring?"
A: (From Annette Haddad, who recently wrote about the boom in sales in the IE): "Reports from experts, mortgage brokers, realty agents and actual buyers suggest it's a mix of all three. There certainly is a pool of buyers that sat out the recent boom and has been waiting for the right opportunity to buy an affordable home to live in. Likewise, there are plenty of investors -- seasoned pros as well as neophytes -- who are finding that as investment properties become more reasonably priced they are finally 'penciling out' as financial propositions. The downscaling phenomenon, i.e. people retiring and moving to the desert, is one of those life issues that is a constant, albeit small, part of the real estate market. Helping sales in general is the simple fact that lower prices mean that mortgages are more often of the traditional conforming type -- under $417,000 -- and thus make bank financing easier to obtain."