- This topic has 6 replies, 6 voices, and was last updated 17 years, 10 months ago by (former)FormerSanDiegan.
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November 21, 2006 at 12:03 PM #7957November 21, 2006 at 12:10 PM #40437BugsParticipant
Deja vu, man. I heard this exact same argument in the late 80s. Everyone wants to be here.
During the last bust, California was the last area to enter into decline and was almost the last area to recover. The past may not predict the future, but we won’t know for sure until the effects of the RE layoffs settle in and the ARMs reset.
November 22, 2006 at 1:41 PM #40547crParticipantI love this site because it debunks so much of the BS we are fed by those that benefit most from the recent boom. The graphs countering the claim of employment, interest rates, or population affecting the housing appreciation are great.
I live in LA, one of the areas lacking room to build, specifically, Burbank. There are some new houses being built, but not to the degree that they are elsewhere.
In Burbank the claim is prices were low because in the 90’s prices dropped when all the aerospace industry layoffs occurred. Now they’re catching up.
You do see more “reduced” signs now, but a decent 3bd house is still about 600k.
For areas like mine, is there any reason to believe prices won’t drop as this article claims? Were the layoffs of the 90’s the reason for prices falling, or did that just coincide with what was happening across the nation already?
November 22, 2006 at 2:46 PM #40552(former)FormerSanDieganParticipantcooprider14 –
See Rich’s articles on the front page addressing the employment myth. They contributed to the downfall and may have made it worse, but the drops in employment started well after housing prices peaked in the last bubble.
I too live in LA. I’m on the WestSide, where there isn’t much room for another vehicle on the road, much less any significant SFR building. However, there are thousands of condo units going in, generally high-end Century City and rehabs of 4-plexes into 16+ unit buildings in West LA. This has suppressed the condo market here. Compared to Westside, there is tons of room to build in Burbank.
Otherwise, my area is eerily similar to what San Diego experienced 1 year ago. Not much movement on prices, still hanging in there, but inventory is up significantly and days on market is high. Many houses come off the market only to be re-listed within a month or so. (sound familiar).
In my opinion most of LA is about 1 year behind SD’s cycle. This should become obvious in the late Spring if it isn;t already. I don’t think we are as overpriced as SD, but it is close and LA will not be spared.
November 23, 2006 at 9:11 PM #40581powaysellerParticipantDataquick data shows prices and sales are dropping already in LA.
November 24, 2006 at 3:00 PM #40600avidsaverParticipantFormerSanDiegan – I didn’t know you were here in the L.A. area. I have to admit that it feels like a long wait — even though I wouldn’t be able to afford these prices anyway.
If we’re about a year or so behind SD, then maybe we’ll see the effects of the ARM resets in more like 2009???
November 27, 2006 at 11:21 AM #40699(former)FormerSanDieganParticipantavidsaver – Yep, I jumped out of the frying pan (SD) and into the fire (LA). Sales have definitely slowed in LA. Prices are have started to top out, much like SD about 1 year ago, a few months before widespread negative downturn in the price statistics.
In mid-2005, when houses started sitting on the market longer in SD (I was selling at the time), there were still bidding wars on the west side. Houses were selling for 5-10% over asking price in parts of LA as late as July-August 2005. The numbers also show LA lagging at least 10 months behind SD.
I believe that mortgage resets will likely hit all areas of southern California similarly, but may hit LA slightly later than SD because of the continued appreciation for a few moths after SD topped out. While I disagree with the assessment of 50% defaults on those loans, these resets will definitely further dampen the market. However, the wild card in all this is interest rates.
If rates are 2-3% higher than currently through 2007-2009, then the mortgage resets would be devastating. However, if we have more slowing of growth or recession, than rates could see some downside from here, and the effect of resets will not be as bad. Particularly if we see a reduction in rates of about 1%. However, prices will be dampened either way.
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