It sounds to me like downtown LA will get hit pretty hard with the tighter lending standards. I like what Bill Fleckenstein said about the next step being the housing freeze
“This credit collapse is an unequivocally important event. Because, as I’ve been writing, the ability of anybody with a pulse to get a loan for any amount is what drove the real estate market, and the real estate market is what drove the economy. Sometime in the next three to six months, the real-estate market will basically just freeze up. Of course, inventories are going to explode and prices will eventually drop rather dramatically as a vicious cycle feeds on itself.”
The L A Times article touched on this
“Downtown broker Perabo says he’s busier than ever answering queries from potential homeowners. But he also is more worried because fewer first-time buyers will be able to qualify now.”
“”The days of 100% financing are over,” he said, adding that about 20% to 30% of the first-time buyers he meets with would be unable to buy without improving their credit standing and coming up with a down payment.”
IMO any remaining remnant that fueled the housing boom has basically evaporated. This is a totally different ball game.
