Give it a bit more time. For my area (San Gabriel Foothills) I have never seen so many For Sale AND For Rent signs, nor have I ever seen it take so long for an otherwise good house to sell. I suspect a couple of things are going on:
1) The current labor market it freakin tight here–we are scraping the barrel looking for highly skilled technicians and engineers. Anyone smart enough with numbers (and you hope your engineers are) can see that even with a six figure salary, it is not such a good deal when houses here start at about $800k. Long term, this will hurt the area, but short term, people feel VERY secure in their jobs–hence risk taking is high.
2) Suicide loans–remember they only started going away a couple weeks ago (I know it seems like longer).
3) Some otherwise smart people I know, who were waiting for years to buy, just pulled the trigger. They claimed to get great deals during the recent “Buyer’s Market”.
4) Schiller effect. When I watch price/sqft it has been sliding downward over the past year. People are (or were) still trading expensive houses to each other from HUGE amounts of equity made over the past 36 months. The market for starter homes here is very quiet. This sends the median up as the lower priced homes stop selling.
Think about it: The 100% LTV and similar loans are GONE. Who do you know that can save $160k in cash to put up a downpayment for a starter home around here(without first selling a home)?
The water cooler attitude is still “I can’t wait for the housng market to drop so that I can buy a home (or second or third).” WHen the attitude shifts towards fear–that will be the time to look for dropping prices. As job losses start, some people will sell their homes and flee the region as fast as they can. Once 20/20 shows re-runs of the 90’s and TNT shows a ‘Falling Down’ marathon the slow but steady flow of what is left of the middle class in LA, likely will rocket.
God forbid we have a real earthquake.
I had left the area a couple years ago for business and the movers said that for every five trucks they send out of CA, three come back empty.
BTW: I’ve been getting warnings from my brokerage house: “The last recession caused the S&P to drop 30-40% IS your portfolio ready?”. It’s really hitting the fan–and possibly worse then I had thought.
