For Housing Crisis, the End Probably Isn’t Near

[Sbane]

The buzz is that in the more "desirable" parts of Los Angeles, housing prices seem to be stabilizing now. We shall see. Stuff is still tanking some more in the Inland Empire, and still eroding, albeit more slowly, in Orange County.

I think the pattern is the same everywhere. Locations close to jobs and city life are holding their prices relatively well, while in the exurbs they are crashing. It is also dependent on where the foreclosures are occurring. For example similar houses are on average about $50,000 more pricey in Pleasanton as compared with the slightly more distant, hotter and exurban Livermore. They have been having a lot of foreclosures and now that difference is on average about $100,000. But in the long term things should even out as more and more short sales come on the market.

[Sbane]

Torie - Two questions...

What are house prices like now in the area where you have rentals or where you own?  Also, what is the average salary of those specific areas?

They are down around 20% from the peak where I live in Orange County, about 40% in the desert, and about 15% in the Los Feliz and Silverlake districts of Los Angeles.  In Portland, Oregon, prices are down maybe 15% as well as a guess, but I am less sure. I don't know about average salaries; that would have to be looked up. I read an article that stated that in some areas incomes to housing prices were reaching "normal" ratios for those areas. In the area around my census tract very little is on the market, and there are almost no foreclosures. The same is true in the LA neighborhoods that I mentioned. Folks just are holding on and not selling, waiting for better times. Also it is hard to find jobs elsewhere, so folks are staying put. The housing market in the desert is a mess because it is a resort area, incomes are way down, and it was way overbuilt anyway, with a lot of speculation.

Yeah there haven't been that many foreclosures in the posh areas of the Bay area as well but things will change when the short sales start coming on the market. Many of these people who bought overvalued homes are going to look for any way to get out of that mess. The only good news may be that the banks won't allow prices to fall as much as in the case of foreclosures.

Also Sam why is there such divergence in housing markets across the country if you think it is so interrelated with income? The LA housing market is valued much more than Dallas or Houston but I doubt incomes are that much lower in those cities compared to LA, if at all. And IIRC this has been the case since before the bubble.

[Sbane]

Torie - Two questions...

What are house prices like now in the area where you have rentals or where you own?  Also, what is the average salary of those specific areas?

They are down around 20% from the peak where I live in Orange County, about 40% in the desert, and about 15% in the Los Feliz and Silverlake districts of Los Angeles.  In Portland, Oregon, prices are down maybe 15% as well as a guess, but I am less sure. I don't know about average salaries; that would have to be looked up. I read an article that stated that in some areas incomes to housing prices were reaching "normal" ratios for those areas. In the area around my census tract very little is on the market, and there are almost no foreclosures. The same is true in the LA neighborhoods that I mentioned. Folks just are holding on and not selling, waiting for better times. Also it is hard to find jobs elsewhere, so folks are staying put. The housing market in the desert is a mess because it is a resort area, incomes are way down, and it was way overbuilt anyway, with a lot of speculation.

Yeah there haven't been that many foreclosures in the posh areas of the Bay area as well but things will change when the short sales start coming on the market. Many of these people who bought overvalued homes are going to look for any way to get out of that mess. The only good news may be that the banks won't allow prices to fall as much as in the case of foreclosures.

Also Sam why is there such divergence in housing markets across the country if you think it is so interrelated with income? The LA housing market is valued much more than Dallas or Houston but I doubt incomes are that much lower in those cities compared to LA, if at all. And IIRC this has been the case since before the bubble.

Prop 17

I guess you meant prop 13? You are absolutely right about that. People are still paying property tax for $300,000 on million dollar homes, thus there is no push for them to sell and move on. Just ing ridiculous. But I am not sure if it explains everything. It seems like home prices are higher in most parts of the country than Texas. And its not as if Dallas and Houston are low income cities. Not at all.

[Sbane]

I guess..... It is a better explanation for the ridiculous bay area home prices IMHO. Land use laws are much more liberal down here in socal and developers just build wherever they feel like. I don't feel there is a supply problem down here, and even if there is it is substantially less than in the bay.