Ask Time Warner. Or, you know, anyone who was paying attention at the turn of the century.

“23,000 homes on the market simply shows the popularity of real esate.”

If the number of available homes goes up, it shows precisely the opposite.

“Anyone like me who bought in ’96 has pretty much seen their home price triple. Just how far south do you see prices going, Nostradamus?”

Also known as: ‘anyone like me who bought stock in ’28 has pretty much see their share price triple’ syndrome.

The bulls and FBs are getting hysterical…

http://www.economist.com/opini.....id=4079027

http://video.google.com/videop.....0658117814

http://video.google.com/videop.....4581111753

Seriously though, the blonde seems really impressed

“23,000 homes on the market simply shows the popularity of real esate. Sales are down because the number of sales are cyclical, and they will rise once the cycle moves to the upside, which will be any day now.”

Ummmm… can anybody state this with a straight face? No, he’s just funnin’ y’all!

The median household income in LA is only $56,000. These families can afford at best a $200-220k home and that too with 20% down. Given that most families in LA are saddled with debt burdens and that the cost of living is so high here I would say they could afford more like $150-200k. Prices will have to fall 65-75% for that to happen. This kind of crash is simply unprecedented. There is a better chance of a 8.5 earthquake than that happening.

I guess in any case we will know more by the end of this year

Forecasting is tricky business, at higher ends, the drop could be 70%. At the lower end it could be 15% with a median drop of 30%, so there are a number of factors that you have to consider… median numbers will never be as dramatic as individual areas (think pets.com vs. Lehman brothers) Some areas and price points are simply more volatile.

wow, that’s quite a drop. and i don’t think what you say is accurate: i’ve read a ton on housing in SoCal and nothing i’ve ever read had the last crash bottoming at more than 50 percent. when do you see this bottom happening? ’07, ’08, beyond? do you think this will happen even if rates don’t hit 10 percent? A 60-70 percent drop, if hitting all the “bubble” areas of the country, well, that’d probably be worse than the ’73 recession. Do you really think we’re in for that?

“Man, Man,
Your time is sand,
Your ways are ships upon the sea;
I am the Eyes of Nostradamus –
All your ways are known to me…”

60-70% drop; that’s what happened in the last crash. From gut reactions to Zillow graphs, a realistic prices would be about half that of current bubble-pricing, and a drop always overshoots before it bounces back. I expect a bottoming-out near 1997 prices.

Same with a couple plots of land near Anaheim City Hall which have been vacant (or interim parking lots) since I moved downtown. Hope they get some of them finished before things hit bottom; I wouldn’t like to have to drive to work past half-completed ruins for the next five years.

I’m waiting for some Indian tribe (a dozen strong) to come out of the woodwork claiming “This Has Always Been Our Tribal Land, NOW WHERE’S OUR CASINO?”

Condoflips & Casinos. That’s The New Economy for you. Even the traditional Arabs’ Raid & Pillage economy makes more sense.

http://www.msnbc.msn.com/id/14251743/

You say that the prices tripled…ok great. Please remember that price increases and decreases are based on their “present” values.

For sake of example, let’s say you bought your house for $200K…it triples to $600K.

Then it loses 50% and goes to 300K. The loss, while not affecting you, will devastate many buyers who bought in the recent years. Why is that so difficult to understand and accept?

You can’t compare someone who bought a house 20 years ago to someone who bought a house 2-3 years ago during a stupid out-of-control housing boom.

The foundation for price increases simply is not there…the reasons for the increases are not “economically” justified and are not healthy….much in the same way where someone goes on a crash diet…you lose the weight but it’s not the proper way to do it.

Still..many of you advocates of housing STILL have not answered questions I posed many treads ago..

How do you propose that people afford housing these days when the average monthly mortgage is going to be well over 3K/month??

No, only the smart money has left the RE market. The dumb money is still in it thinking that there will be a softlanding and the 20% / year appreciation engine will resume in 2007. That’s why the price’s haven’t fallen drastically yet. There are already price declines in SD county. Seriously, do you think that the schumcks making $50K a year signed up to buy a 600K house using an I/O because they weren’t “speculating” on appreciation??? Wait until the first wave of resets in I/O’s start, which is not far off. You’ll see the foreclosures spike even more than they have in the past couple of months.

I was thinking of owner-occupied homes. You are right that there are probably people who took all the equity to buy another property and so on. But by now the speculators have already fled the market (ask any real estate agent or read about it online) and prices still have not dropped.

He is here posting quite long comments that barely make sense, with contradicting cliches.

See the discussion on this topic here:

http://piggington.com/are_hous.....overt_publ

Realist/Anon:

while you are there go ahead and read the bubble primer.

Yes, I do think there are a lot of people in SoCal that did exactly that. They bought houses in the Inland Empire, Arizona, Florida, etc. They’re speculators or the perjorative “flippers”.

Since prices rose about 40 percent from Aug 03 to Aug 05 you are only talking about giving back two years of a ten year boom. Even if you only look at the true boom part as five years, you’re still only talking about giving back two years. How much harm is that going to do to anyone but the most recent buyers who had to really stretch and use exotic loan products to buy their home?

And how much re-fi do you think someone could have done who’s seen their home price triple. I mean, do you think there’s a lot of people who bought in ’96 who have taken out a million dollars of equity? That seems nuts. I don’t have a Hummer or a plasma screen. I bought a digital camera and a mountain bike — does that count?

You say panic could set in and drive prices down even more than 35 percent. In LA proper, prices went down 50 percent from ’89 to ’96 (and then approximately tripled since.) There was an earthquake, riots, fires and the virtual end of the aerospace industry, but I don’t think there was any panic.

If this really is a bubble (it’s not) then it’s certainly a much bigger “bubble” than the price rise of the late ’80s, so logically, wouldn’t the burst be bigger than the 50 percent drop we saw the last time? It seems to me that you like to say you’re a bear but that you’re really a bull in bear’s clothing. To say that after the greatest housing boom in U.S. history we’re going to give back 30-35 percent, well, that’s nothing, that’s just a normal market correction because maybe things got a little carried away at the end by some young people who weren’t old enough the last time around to understand that home prices are set in a market and can go down.

If you haven’t bought a house and feel home prices will drop by a third, I suppose it might make sense for you to wait. But if interest rates rise by a third in the meantime (very possible, that’d only mean a couple points) then your payments will stay the same anyway!

It seems to me you need to figure out which side you’re on. Either look at this as a Japan-level bubble that will send housing prices down 60-70 percent or see it as a short-duration bump on the road to ever greater equity. My parents bought a home in SoCal in 1964 for $16,000 that’s worth about $585,000 today. That’s about a 36-fold increase. So the million-dollar house today could cost $36,000,000 in 30 to 40 years. That looks insane but that’s how prices work. So wouldn’t just about anyone be better buying today for one million if they can hang on and make the payments than wait and pay $36 million tomorrow?

How much you say. I’d say 30 to 35% in nominal value from the peak in August 05. Could overshoot because panic might set in.

Of course if you bought in ’96 you’ll be okay right? Unless of course you refied out several times to buy plasma screens and Hummers and vacations…then you might have a problem.

Actually, they have never been at that level, not even adjusting for population increases. bubbletracking blog has some great insights into the glut of inventory over time as it has grown. Will it go higher? I’m actually thinking that we’ll come off of the high number of listings later in the year through seller frustration or “waiting to get a jump on next year”, which unfortunately was what was said late last year and we had the “silent spring”. Unfortunately for many, I dont’ think we’ll see the heydey of 2004 and 2005 for a long, long time, perhaps 15 years or so.

I bet you were equally as confident three years ago when you told all your friends that “no way” prices would go higher. I hope they didn’t listen to you.

P.S. — Anyone like me who bought in ’96 has pretty much seen their home price triple. Just how far south do you see prices going, Nostradamus?