LA Times Letter to Editor

[New Guy]

Below is a response from a realtor to an article the LA Times ran last week in which Dean Baker gave his opinions on the state of the real estate market. While everyone is entitled to their own opinion, the author of this letter seems unbelievably out of touch with the real estate market.

From: LA Times

No housing bubble in L.A.

September 9, 2007

Regarding “For Borrowers in a Bad Spot, Situation May Only Get Worse,” Sept. 2: When [financial expert] Dean Baker was asked, “What does a bursting housing bubble mean to the average homeowner?” he should have first noted that in the L.A. market there is no bubble.

Further, the situation in Los Angeles does not come close to what happened in the 1990s recession caused by the demise of the defense industry, followed by the Rodney King riots, fires, earthquakes and floods.

Buyers who submitted bogus loan applications, stretched themselves beyond their means or speculated on the market should not be bailed out at the expense of depositors, stockholders and taxpayers.

There are realistic ways to help innocent homeowners finding themselves upside down in their homes due to illness, layoffs or other unpredictable developments. Lenders will work with these borrowers. One solution, albeit with tax consequences, is a “short pay,” which allows a home to be sold for less than the amount owed. Borrowers finding themselves in trouble should speak with their lenders to see what solutions are possible.

Susan Stone

Agoura Hills

The writer is a Realtor.

[LA_Renter]

I wonder what that writer thinks of this data, This is from the LA times blog. I previously posted this on the LA Loft thread.

“L.A. sales down 50% in August
News item: The first look at August home sales in L.A. County shows sales dropped by 50% from year-ago levels. That is not a typo — half the sales market disappeared.

Los Angeles Business Journal: “The expanding morgage crisis and credit crunch slammed the Los Angeles housing market in August, with home sales plunging 50% from the same month last year and 25% from July … The pain was widespread, as only a handful of the county’s nearly 300 ZIP codes managed to eke out any sales gains…. August’s median sales price dropped slightly from its record July level to $579,000.

More: “Everything was great until about a month ago,” said Beverly Hills real estate agent Syd Leibovitch. “Then, on one day — Thursday, Aug. 9 — everything changed as lenders shot up rates on jumbo loans to 9% and further tightened guidelines…. It became almost impossible to find a jumbo loan.”

Our take: We wonder if a drop-off like this is unprecedented — anyone out there remember a month when the market dropped this sharply — 25% from the previous 30 days? 50% from the previous year’s level? We only ask because we’re starting to believe the current downturn may not look like previous slumps. Yes, California real estate is cyclical, but as Countrywide said yesterday, this cycle is different.”

http://latimesblogs.latimes.com/laland/2007/09/la-sales-down-5.html?cid=82112091#comments

No sign of a bubble popping in LA right now. No Sir. Watching denial crack in LA is becoming quite entertaining!!

[HereWeGo]

As I’ve posted before, look for some very interesting graphical discontinuities in our favorite housing bubble plots in the wake of the credit crunch.

I’m more than a little worried that we’ll see another such discontinuity in September employment numbers if the commercial paper crisis is allowed to continue unabated.

[LA_Renter]

“if the commercial paper crisis is allowed to continue unabated.”

That one has me more than a little bit worried I have to admit. Next week looks to be interesting

“Banks face 10-day debt timebomb”

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/09/cndebt109.xml

[cr]

This line crackps me up:
“Further, the situation in Los Angeles does not come close to what happened in the 1990s recession caused by the demise of the defense industry, followed by the Rodney King riots, fires, earthquakes and floods.

A lot of Realtors in this area are disillusioned. They think LA is invincible, impervious to economic downturn because stars live here.

As I have stated several times, I have to agree, this time is different. This time the layoffs will be caused by housing, which will drive sales and prices down harder. Countrywide HQ are right near Aguora, so if more layoffs come there lil ‘ol Susan may eat her words and then some.

[JWM in SD]

This just goes to show why the barriers to entry for Realtors is so low. The circumstances surrounding this are completely different. There just seems to be a complete lack of ability to connect dots in the profession.

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