Do you think housing prices are STILL going down in California? (Los Angeles: short sales, 2010)

[motoman]

The housing market | Dropping a brick | Economist.com

[goodbyehollywood]

I'm done. Waste of time.

[motoman]

Originally Posted by goodbyehollywood

I'm done. Waste of time.

Yep. Just have to agree to disagree.

[motoman]

Originally Posted by goodbyehollywood

Whose reality? You're trying to make an irrational market fit your concept of what you think the correct valuation should be. And while I don't disagree with your thought process, our theoretically free market is being propped up, bailed out and jump-started by manipulators at every level, from lenders up to the Oval Office, then overseas to global financiers with much to lose. Applying fundamental logic to illogical manipulation leads to frustration and makes market timing virtually impossible. Not that anyone can ever really game the market, but we really can't, given the puppeteering going on.

Ummm...I didn't realize people were able to sell houses to, and lenders were able to lend money to, people that didn't want it. So what you're saying is the people didn't demand all of these houses with this insane mortgages, but rather they were forced upon people? Wow! Thanks for the conspiracy theory. That was helpful. I suppose people actually thinking about the impact of the largest financial decision they will ever make in their lives is just too much to ask?

Originally Posted by goodbyehollywood

L.A. is a dichotomous market. In some parts of L.A., you're buying a house; in other parts, you're buying a lifestyle. Some warrant a premium; others don't. People who don't want to pay the premium bottomfish elsewhere. A lot of people are willing to pay a premium to insulate themselves from the hoi polloi, so they do. High demand and low supply lead to artificially escalated prices in lifestyle locales.

I agree with this, except that you need to qualify that statement by saying the "high demand" that leads to these "artificially" escalated prices can only be driven by two things: 1) a borrower's ability to actually be able to afford the purchase, and 2) a lender's willingness to lend the money. Without either of those, it doesn't happen. In this case, lenders got way too generous, yes artificially driving up demand and prices. But that segment of the lending market is now gone, which means the artificial demand goes away, even in the higher priced markets. And you're seeing that now in falling prices. And they will continue to fall.

Originally Posted by goodbyehollywood

For whatever reason, there is a psychological difference between renters and owners. I would hate paying someone else's mortgage and having them dictate what I could and couldn't do and when. So I choose to own and rent to others, who're content being on the other side of the equation. When I'm buying investment properties, I pencil it out. But that's a whole different scenario.

There are many reasons people buy or rent. Some buy because they think housing is a good investment. Over the long-term they have consistently been proven wrong. You could make a significantly better return in many other asset classes, like stocks and bonds. Some people feel it is their duty in life to "own" a house. Some people feel owning a house is a symbol of "making it" in life. Renters may do so because they don't want the burden of owning a home. Or maybe they realize they can rent for significantly less than what it would cost to own a home. Or maybe they move a lot and buying a house doesn't make financial sense given the extraordinarily high transaction costs. You seem to think owning at any cost is the right thing to do. I think it's a horrible financial decision.

Originally Posted by goodbyehollywood

All JMO. I don't profess to know what will happen; I'm just trying to make smart decisions based on what I think will happen. And I don't see all of L.A. falling equally, for varied reasons. Others disagree, so time will tell.

Of course not all of LA will fall equally. I've never said that. I have simply said that general prices have fallen, and signficantly, and will continue to fall for some time. The higher priced areas take longer to adjust because those people have actual money to buy, rather than relying on creative financing and falsifying their income and assets like so many "buyers" did over the past few years. But at some point you run out of people with actual money, so prices fall to a lower level where there are more potential buyers. Simple supply and demand.

[greggd]

Originally Posted by motoman

The higher priced areas take longer to adjust because those people have actual money to buy, rather than relying on creative financing and falsifying their income and assets like so many "buyers" did over the past few years. But at some point you run out of people with actual money, so prices fall to a lower level where there are more potential buyers. Simple supply and demand.

"but at some point"

And you can wait & wait & wait... for those prices to fall. Then, at that special moment, when they dip 10, 20%, you jump in at the ripe age of 70 and finally get that property at a discount.

[motoman]

Originally Posted by greggd

"but at some point"

And you can wait & wait & wait... for those prices to fall. Then, at that special moment, when they dip 10, 20%, you jump in at the ripe age of 70 and finally get that property at a discount.

Well, I don't make $300,000+ per year, so I don't even think about buying one of those homes. :-)

[greggd]

Originally Posted by motoman

Well, I don't make $300,000+ per year, so I don't even think about buying one of those homes. :-)

My opinion has always been that with the sheer size of los angeles, there is a relatively small area that is considered exclusive, Malibu, Bev Hls, Brentwood, Pac. Pal, south bay all along the coast, etc.

With that, there is a pretty sizable population here who makes a substantial amount of money. There is a lot of industry here, a lot of service businesses as well. The owners, developers, investors, ceos, doctors, lawyers, etc will pay extra to live in what goodbyehollywood referred to as an insulated area. Heck, there was a place up in sunset mesa that sold a few months ago for about 3.4 mill and the family paid cash. I recall another guy bought a place 1-2 years ago for about 4.5 mill, then turned around and picked up an aston martin (the 12 cylinder). He still has both and is a wealth manager.

The dollar is at an all time low against the Euro so that makes a difference as well. I know of one guy who is here from England for 2 years. He rented a house for about 5500 a month in brentwood. Thats about 3k to him in euros.

So when you guys were going back and forth, I seem to think yes, prices in the better areas may drop, and in some cases already have a bit, but I dont see them falling like they have been in other areas, especially the valley and further outlying communities. The prime mortgages are supposed to reset heaviest in 2009 I believe.. I saw a chart in a magazine some time ago. We will have to wait and see. Personally, I hope your right. Id like to pick up another place but I sure wouldn't put my life on hold to wait.

[karkyco]

Greg, did you see this?

The-Next-Real-Estate-Crisis: Personal Finance News from Yahoo! Finance

Those "prime" areas don't exist in a vacuum. Certainly, there are extremely exclusive communities and cities/towns, but they have also been heavily developed over the housing boom, and will there be enough of the "haves" to sustain prices or keep them from sliding too much?

We've already heard and seen listings in prime parts drop 25% (or more) of the original asking prices, although many of those original prices were for peak value or even more.

I think that we on the west side simply haven't seen the problem yet...it's been delayed but it is on the way.

[shannon94]

Heck.... even Ed Mcmahon is headed for foreclosure.......

[Cubancoffee]

Speaking as someone who's actually out there in the real estate market looking for a home, I can say that prices in many nice (but not exclusive) in-town areas are definitely coming down. A lot.