CA Homes, Affordable Yet? (Los Angeles: real estate, good credit, loan)

[Soccersupporter]

Calif. home prices off 28.9%, nation's worst drop

California home prices were falling at a 28.85% annual rate in late October, worst decline in the nation, reports First American LoanPerformance. It’s the 18th consecutive month California has taken that dubious honor.

Calif. home prices off 28.9%, nation’s worst drop - Lansner on Real Estate - OCRegister.com

[bhcompy]

affordable in the desert and in the ghetto. not in the safe middle class areas

[brianguy]

exactly.

experts predict at least another 15-25% decline... this would need to happen to bring housing prices more in line with income & REAL lending standards.

FULL COVERAGE: SOUTHLAND HOUSING MARKET - Los Angeles Times

[EscapeCalifornia]

Originally Posted by brianguy

exactly.

experts predict at least another 15-25% decline... this would need to happen to bring housing prices more in line with income & REAL lending standards.

FULL COVERAGE: SOUTHLAND HOUSING MARKET - Los Angeles Times

Even if the livable neighborhoods drop another 25%, they'll still be pretty expensive relative to incomes.

[killer2021]

Originally Posted by EscapeCalifornia

Even if the livable neighborhoods drop another 25%, they'll still be pretty expensive relative to incomes.

Lol yea I think that is the icing on the cake. The only reason homes got bid up was because the cost of lending was lower (low interest rate) and credit was easy to get. Now it is the exact opposite - banks afraid to lend even to people with good credit, verify all income, and high income required.

To make it worse, back then unemployment was low, now it is substantially higher which means the number of potential buyers has shrunk. Unemployed people aren't going to be in the market to buy, even if they've saved up for a couple years. Newly unemployed homeowners might be looking to sell and move down to something they can afford. More pressure to drive home prices down.

I am expecting a 50%+ drop across the board. The bad areas have already got there. The good areas are coming a long.

[serialdriller]

Its gonna drop way more!!! Sucks to be anyone who bought a home in the last 4 years or so.....

[Charles]

Originally Posted by killer2021

The only reason homes got bid up was because the cost of lending was lower (low interest rate) and credit was easy to get.

Why did this happen so dramatically in Southern California (as compared to Houston or Denver or Atlanta or Salt Lake City...)? Cost of lending was lower and credit was easy there too.

[EscapeCalifornia]

Originally Posted by Charles

Why did this happen so dramatically in Southern California (as compared to Houston or Denver or Atlanta or Salt Lake City...)? Cost of lending was lower and credit was easy there too.

I think there's more of a gold rush mentality in California than other places. Everyone knows how quickly housing prices here can rise when you're in an up trend. And who doesn't know someone who made a lot of money on the booms of the 70's and 80's? Other places just don't have that reputation. When people saw it happening again, they were willing to take a lot of risk on what they saw as a sure thing. And a lot of people DID make money in this boom if they got in early enough and cashed out before the music stopped. Like a pyramid scheme, the earlier arrivals get rich, the late comers wind up holding the bag.

[Charles]

Originally Posted by EscapeCalifornia

I think there's more of a gold rush mentality in California than other places. Everyone knows how quickly housing prices here can rise when you're in an up trend. And who doesn't know someone who made a lot of money on the booms of the 70's and 80's? Other places just don't have that reputation. When people saw it happening again, they were willing to take a lot of risk on what they saw as a sure thing. And a lot of people DID make money in this boom if they got in early enough and cashed out before the music stopped. Like a pyramid scheme, the earlier arrivals get rich, the late comers wind up holding the bag.

I understand what you wrote. And it makes some sense. I just wish it could be quantified or something. I can't say this isn't the reason but it just seems like there's got to be something more tangible than "mentality".

Maybe I am being unrealistic that there is a purely economic model to explain this.

[cobmw]

What difference will the cost of homes be when there are no jobs?