Do you think housing prices are STILL going down in California? (Los Angeles: buying a home, buying)

[CA4Now]

Originally Posted by greggd

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, etc.....what goodbyehollywood referred to as an insulated area. So yes, prices in the better areas may drop a bit, but I don't 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 agree that in some areas prices may never drop substantially. A close relative and spouse sold their home in South Pas in 2005, and found out that the people who purchased their home sold it this spring for $20,000 more than the 2005 price.

OTOH, with other areas, it doesn't sound as if it will hit bottom in the near future. I read in yesterday's LAT that the chief executive of ZipRealty was quoted as saying, "I think we're going to hit bottom sometime around 2012. There are 40 billion adjustable-rate mortgages resetting in 2011. Nationally, we currently have an 18-month supply of homes on the market. There will be 250,000 foreclosure notices given this year. Anyone who thinks this is going to get better in the next few years is crazy."

[sheri257]

Originally Posted by CA4Now

"Anyone who thinks this is going to get better in the next few years is crazy."

Yeah but ... when I start hearing experts like this getting really pessimistic ... and it's all over the news becoming conventional wisdom.

That's usually the time to buy.

[motoman]

Originally Posted by sheri257

Yeah but ... when I start hearing experts like this getting really pessimistic ... and it's all over the news becoming conventional wisdom.

That's usually the time to buy.

Actually not. The time to buy is when the average Joe/Jane on the street starts talking about how they'll never buy a house again, or invest in real estate again, etc. When the average person starts talking doom and gloom, there's no one left to prop up the market. That's when folks like you, Sheri, jump in and start riding the beginning of the next wave.

Same holds with the stock market. I remember during the dotcom bubble sitting in a Subway at lunch. There were a group of construction workers sitting around talking about how good of an investment Microsoft is. I thought to myself, this has got to be the top. It was near it. But I wasn't smart enough to listen to myself.

This time around, I remember reading an article in The Economist, which mentioned a Playboy Playmate wanting to get into real estate investing. They pegged that as the top of the market, and they were pretty close. That was back in mid-2005.

A buddy of mine owned 4 or 5 rental properties in Dallas. I spoke with him last year and he said he sold them all. His reasoning? Because every Joe/Jane in the world was getting into the rental market, so he figured it was time to get out. He timed it perfectly.

The experts, however wrong they are, are still generally ahead of the average person. Once the average person jumps on whatever bandwagon is hip at the moment, that's the time to get out, because there aren't enough people left to continue to drive the momentum in whatever direction it has been going.

[motoman]

From Yahoo! today:

So. California home prices, sales plunged in May: Financial News - Yahoo! Finance (broken link)

Median home prices dropped 26.7 percent in May across Southern California's six most populous counties compared with last year, a real estate research firm said Monday.

Median home prices fell to $370,000 in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties last month. It was the lowest median price reported since March 2004.
-----

So we are already back to 2004 prices. $370,000 x 94% (just seller commissions), nets $349,000. So, if I bought at $540,000 in 2007 (the median in LA for that year), and sold now for a net of $349,000, was that a good investment? Real estate prices never go down right? I wish I could have lost $190,000 in the last year. I would have been soooo happy.

I remember posting on this board late last year that prices were likely to fall 30%-40% from the peak. We're down over 30% already and still have a good way to go.

[moxiezbug]

Yes! I can finally have a shot at owning a house in California!

[karkyco]

Originally Posted by motoman

Oh yeah. There is a builder now that is offering to give you a $400,000 house if you buy a $1.6 million house. See, prices never go down, you just get a free house so that the quoted price on the higher priced home stays the same, even though the effective price is reduced 25%.

See, higher-end homes never fall in price. That's why this builder is giving away a $400,000 home. Because the $1.6 million homes are selling so well they don't need any incentives to get people to buy.

La la land!

In Escondido: Buy one (house), get one free. | L.A. Land | Los Angeles Times

Although that was nothing more than an advertising gimmick (builder's spokes-hole admitted that not a single deal was made under this offer), that was a hilarious story.

"Buy 1 McMansion, get 1 Shoebox Free"

[karkyco]

Originally Posted by greggd

If prices in santa monica drop to $225k, Many will be purchasing entire city blocks.

I see very few foreclosures in Palisades, Malibu, and Beverly Hills Most of the time they are on the market and sold at market price.

LOL, I know I will! Hell, I may try to buy the entire city. Me and a million others like me.

[Huckleberry3911948]

yes they are. the banks however are clever fellows and will try to delay or cat & mouse with offers.
which gives an inaccurate market reading.

pdclilpart.com
free clipart

[SoCal Bottom Rider]

'Yeah but ... when I start hearing experts like this getting really pessimistic ... and it's all over the news becoming conventional wisdom.

That's usually the time to buy.'


The media is always late to the party by default. Use all the flawed logic you want to convince yourself now is the time to buy in a declining market. Be my guest.

[JohnAlt]

Originally Posted by SoCal Bottom Rider

'Yeah but ... when I start hearing experts like this getting really pessimistic ... and it's all over the news becoming conventional wisdom.

That's usually the time to buy.'


The media is always late to the party by default. Use all the flawed logic you want to convince yourself now is the time to buy in a declining market. Be my guest.

Agree. Knife catchers have a role in this, setting the comps on the way down.