Tuesday, March 25, 2008

Case Shiller index for LA updated to Jan 08


Pay attention to the peak and the shape. Compare to the last boom-bust of 1990's. The current decline is much steeper. Did anybody say slippery slope...

6 comments:

Michael S. said...

My wife and I are wanting to buy a house in the Valley- Studio City/Sherman Oaks.

When do you think we will have hit bottom?

LakerLand said...

Hey michael s.

Short answer, not before spring 2009 for sure! Maybe 3Q of 2009 or winter 2010
It might be tempting...i know.
Think about a 60 inch LCD that used to sell for $5000 and you want it. Today it is $3999 and you tell your wife that if you buy now, you are saving 20% of the peak...
I say great.
But,,, this LCD tv is heading to $2000....can you hold on?

I've been spending huge amount of time to realize and understand the current bubble pop. I've been saying it to all my friends and family since 2002...
My conclusion is that median house price in LA is heading to 2001 price level. So, if you find the house you want and can get it for the amount it was sold in 2001, that is the bottom.

Michael S. said...

Thanks. I've been very hesitant to get in the game at this point.

I'm curious, do you think we'll see the same kind of movement in the beach communities? From what i've been watching it doesn't appear that Venice and Santa Monica are experiencing anything like the depreciations we see in the Valley.

LakerLand said...

Michael s.,
The population in the west side and the beach area simply has more money, resources, and assets. They clearly can hold on longer than the paycheck to paycheck people in the valley. (Not that everybody in the valley is such)
However, rich people also took adjustable mortgages, and many took Option ARM. There were also many wanna be rich that bought in those areas. All that is needed is some increase in job loss rate, and couple of foreclosures.
Look at the 90's boom-bust. The decline in high end was even greater than low end.
When you interrupt the housing "food chain" that will create a problem with move up buyers.
You'll be surprised but without first time buyers, even the high end will stop appreciating and will decrease in value in the long run.
West side to valley compares to LA to Riverside...
In 2005-6 Riverside began a decline in value, but LA was still booming. So many were saying that LA will never decline, and riverside is local problem...
Now the same people are saying valley is declining, but west side will never decline...valley is local problem...
the mess is contagious, and like cancer, it will get to west side too. Just little bit later. Give another 12 months and you'll see.

Michael S. said...

Thanks, Lakerland. I like your blog.

LakerLand said...

cool, enjoy.
I just found some interesting info on a foreclosed house bought at REDC auction. I'll post that shortly.
You'll love that!