Do you think housing prices are STILL going down in California? (San Francisco: purchases, place to live)

[EscapeCalifornia]

Originally Posted by cmw2133

Thanks.

I was looking at zillow and it occurred to me that the crisis is kind of self-perpetuating... as housing prices fall, more and more (potential) buyers will find themselves underwater on their current mortgage and thus unable to leave their current home and move to a new one. With a dearth of buyers, housing prices fall further, meaning more potential buyers are underwater in the homes they're in. Do I have that right?

Well just because your house's value sinks doesn't mean you can't afford to keep making the payment. Its the people who are barely getting by, can't refi because their equity is gone, are facing ARM resets, etc that are going to say screw it and walk away. That's what puts more inventory out there, depressing the market further.

[sheri257]

Originally Posted by ITChick

That is so true! When I find out there are multiple offers on a property (and the Realtor is willing to put me on a waiting list) I just walk away.

Yeah ... that's the problem. When everybody says wait for lower prices ... wait for what? More bidding wars?

If a thousand people are bidding (and they usually are if it's anything decent) you're not going to get it anyway.

[Charles]

"More likely, prices in Southern California will settle in late 2009 at a level roughly 55% below their peak, said Christopher Thornberg, a Los Angeles economist.
That would amount to a price near $230,000, a level at which home prices would be roughly in line with incomes by historical norms."

from

Home prices expected to fall further in 2009 - Los Angeles Times

[goodbyehollywood]

Maybe in the IE and desert, but that article doesn't reflect the reality on the Westside of L.A. If home prices level out this year, they will hardly have fallen at all in some areas. In some neighborhoods, they're still going up. If the government props up all the troubled homeowners, there may be no appreciable decline in the L.A. beach cities.

[BRinSM]

if there is no appreciable decline in prices, there will also be little to no sales on the westside. people just aren't willing to pay the prices buyers want for the current inventory of homes.

[timelesschild]

Prices are still going down in the SGV, for what it's worth.

[EscapeCalifornia]

Originally Posted by BRinSM

if there is no appreciable decline in prices, there will also be little to no sales on the westside. people just aren't willing to pay the prices buyers want for the current inventory of homes.

Not only aren't people willing, people simply aren't able to pay $900k for a house today now that the banks expect them to put their own money into it and prove their ability to repay the loan. The insane leverage handed out like candy during the boom made everyone look like a multi-millionaire. Now we're finding out how few there really are.

[NickelDime]

Prices always fall in line with incomes and affordability. They went up because of the leverage afforded to buyers with suicide loans. Homes were affordable for 1-3 years at the inflated price. Those days are coming to an end.

ps How many people do you know that could afford their own home at its peak price?

[goodbyehollywood]

I'm seeing that the most desirable homes are still selling for close to asking in the good coastal neighborhoods. The ones that are sitting would be less desirable fixers, even priced $300K less. Tiny beach shacks with 1950s pink and black tile, 1960s appliances, ancient wiring and dead landscaping are still priced upwards of $700K and it would take another $100K or more to update. That's nowhere close to income-aligning with a well-paid working professional at a back-to-normal DTI, so what's it going to take to bring the prices down? And if the government and lenders continue trying to keep overextended homeowners in homes, how's the market ever going to re-align?

[timelesschild]

CNNMoney.com || Get ready for more pain ahead (http://cnnmoney.mobi/money/business/economy/detail/116808/full#p1 - broken link)

Here is an article relating the employment market with the housing market. Looks like housing is going to keep on dropping until people stop losing jobs.