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Old 08-05-2009, 04:59 PM
 
Location: Los Angeles, Ca
2,884 posts, read 5,287,423 times
Reputation: 2737

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To play devils advocate, a lot of people wrote off LA after the 91/92 recession and the Rodney King riots. Remember everyone leaving California?

-Its funny that that was when gas was $1 something.
-Homes were $200-250k

At the time in the middle 90's, it seemed like it would never recover.

But with this downturn, its going to be a very long and bumpy ride. Much much longer than the early 90's downturn, since there are still so many houses to fall with their arm loans. But on the 2nd or 3rd drop, one of the drops will be the bottom.
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Old 08-05-2009, 05:15 PM
 
Location: RSM
5,113 posts, read 17,782,649 times
Reputation: 1893
Except last time there wasn't government support, so there is no telling what will happen in the end because it's new territory
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Old 08-05-2009, 07:50 PM
 
Location: San Jose
1,044 posts, read 2,433,618 times
Reputation: 952
Quote:
Originally Posted by John23 View Post
To play devils advocate, a lot of people wrote off LA after the 91/92 recession and the Rodney King riots. Remember everyone leaving California?

-Its funny that that was when gas was $1 something.
-Homes were $200-250k

At the time in the middle 90's, it seemed like it would never recover.

But with this downturn, its going to be a very long and bumpy ride. Much much longer than the early 90's downturn, since there are still so many houses to fall with their arm loans. But on the 2nd or 3rd drop, one of the drops will be the bottom.
I wouldn't be surprised if houses are once again back in the $200-250k range (in 1990s dollars, obviously higher in current dollars due to inflation) once the market bottoms out this time. All that would do is put house prices back to their historical ratio to people's incomes.

I don't feel that I am even going out on a limb with that prediction - if you think about it, any other outcome is economically impossible. Long-term, houses can't be more expensive than the local population can afford to buy.

I also agree that this downturn will last longer than the previous one due to the scale of the bubble that is now bursting.

There will no doubt be people once again willing to write off LA and California. That will be precisely the right time to buy!
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Old 08-05-2009, 07:53 PM
 
Location: southern california
57,802 posts, read 76,763,748 times
Reputation: 51086
then yahoo is like some pretty women i have known and loved, they are lying out their beautiful teeth.
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Old 08-06-2009, 12:07 PM
 
Location: South Bay
7,141 posts, read 19,527,516 times
Reputation: 3402
this is an interesting article and certainly doesn't add any credibility to the so-called "bottom callers".

Underwater world - Aug. 6, 2009
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Old 08-06-2009, 01:26 PM
 
Location: Las Flores, Orange County, CA
26,345 posts, read 84,701,631 times
Reputation: 17581
Quote:
Originally Posted by jbunniii View Post

There will no doubt be people once again willing to write off LA and California. That will be precisely the right time to buy!
Yep. Similar to Warren Buffet's take on stocks: "Be fearful when others are greedy, and to be greedy only when others are fearful."

In some ways, the next year or two could be an opportunity to buy in Southern California. Interest rates are still low, housing is still falling; It might be a perfect window. We sold in June 2006 at the d(price)/dt=0 peak. Now we're seeing nice homes in nice neighborhoods for $200-$250/sqft. That's what we paid in 1997 ($150/sqft) adjusted for inflation.

Here's a great example in Ladera Ranch in South Orange County, CA. (I'd post the URL but I am in the City-Data Forum dog house and I don't want to get zapped.)


This poor guy bought this home for $1.3M in 2004;
Now he's selling it for $820K ($215/sqft):

24 Winslow St, Ladera Ranch, CA 92694 | MLS# S550961
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Old 08-06-2009, 02:01 PM
 
Location: Whittier
3,007 posts, read 5,283,794 times
Reputation: 3053
I'm still holding to my guns and saying when I see a COLA (<---works for a school district) then we'll all be above water. This isn't happening any time soon.

Houses in LA are still over-priced. Prices in the outlying suburbs are getting pretty reasonable though.

Wage (median income) to housing costs are still out of whack.

People need to save more for down payments, and state programs under CALFHA are still frozen.

Furloughs and layoffs are still evident. The state does not want to pay more taxes nor do we want cuts. Our governor would be impeached if he mentioned any taxes of any kind. (just like good 'ol Gray)

I was saying that the bottom would be the end of this year, with a stagnant period for 1-1 1/2 years, but now it seems the bottom is a year or so away with the same stagnant period.
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Old 08-06-2009, 05:13 PM
 
Location: San Jose
1,044 posts, read 2,433,618 times
Reputation: 952
Quote:
Originally Posted by Charles View Post
This poor guy bought this home for $1.3M in 2004;
Now he's selling it for $820K ($215/sqft):

24 Winslow St, Ladera Ranch, CA 92694 | MLS# S550961
Wow, that's a mansion compared to what you get for the same price in my neighborhood (Almaden Valley, San Jose).

A very typical example in the same price range would be

715 Grimswood Ct., San Jose, CA 95120, MLS#80937471

Median asking price here remains well over $400 per square foot, for plain old working-class 1960s and 1970s houses. Meanwhile those same houses are renting for around $1.25/square foot per month. It just doesn't make sense to buy given those numbers.

It gets even more absurd as you go up the peninsula: Mountain View, for example, has a median asking price of over $550 per square foot, again for a very mediocre housing stock, and a highly overrated downtown and school district to boot.

I wonder if such a wide price disparity can persist long-term between the Bay Area and southern California; if SoCal prices were to stabilize at, say, half those in Silicon Valley, then surely there would be some kind of arbitrage effect whereby enough people would move south to take advantage of the much lower prices and similar climate/lifestyle.

I recognize that OC's job market has been hammered a bit harder than SV's, but it's not as though the region is bereft of tech and other high-paying jobs.

OC looks more attractive to me every day; my employer is based in Irvine and I could easily transfer and keep my same job and income.
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