I think the story on the Westside and premium pockets are the sales volumes. They are getting critically low. I live in the South Bay and we see a similar story with nicer properties not budging in price too much yet. But if you look at the number of transactions taking place it is eye popping. Communities in the South Bay total dollar transactions are off by 30% to 50% from last year which wasn’t that great. This is the same thing that happened to the low end starting in 2006. The volume dried up first, the few properties that were selling got close to full bubble price, now we are in the middle of a bloodletting clearing of inventory with the price per sq ft falling anywhere from 25% and in some cases 50% to 60%. The premium areas of S. Cal cannot sustain these prices at current sales volumes. You have a move up buyer that is snagged in the lower to mid tier, a weakening economy that is becoming more pronounced, a crippling credit crunch along with a second wave of option arm resets. In the face of these headwinds I am of the opinion that the Gubment bailouts are nothing more than the “Mouse that Roared”. Thee are very few PRO demand undercurrents right now other than a few really wealthy people with some cash on the sidelines (that alone will not drive the market).
Now I do think that LateSummer08 should change his handle to LaterSummer09. It is interesting that the areas where the bears have been wrong have not been on fundamentals but on the timing, that includes Poway Seller (no the S&P will not go to 600), AuctionHeaven07, LateSummer08, to the economist like Christopher Thornburg and Roubini. We are going into the worst part of this economic downturn and housing correction starting right about now of course IMHO.
