Saturday, June 13, 2009

Where's the Bottom?

That's the million dollar question? Is it at a certain price? Or, during a certain year? Better yet, when will we see the first signs of appreciation in residential real estate? Obviously, there are many opinions to these questions, and I welcome them all. However, please back up your opinions with some FACTS. Dr. Housing Bubble has great evidence about the California Market that needs to be read by everyone. It is titled "Foreclosure Reality Check" . He provides undeniable data that will make everyone think twice. Patrick.Net, also has excellent daily statistics that must be looked at. If you want a good beat on the market, I highly suggest reading these two blogs daily. Both of them are linked in my Favorite RE/Economic Blogs Section to the right.

It's my belief the coming wave of ALT-A, Option ARMs, and Prime loans going sour, will deal a devastating blow to the Westside. Until we cycle through these loans in 2012 (Credit Suisse), real estate that hasn't corrected at least 50% from it's peak (2007), will get hit hard. Then, we'll drag along the bottom until 2015, before any hint of appreciation is felt. Remember, the biggest real estate bubble in our history started in 1997 and lasted 10 years. We are only 2 years into this downturn, and when has a real estate crash not affected ALL levels of the market?

This summer will be the last chance for sellers, if they are smart. Come September, we'll see obvious distress on the Westside, and prices will plummet. Late summer of 2009 marks the major turning point on the Westside. 2013- 2015 will be the bottom after all the garbage loans are worked through. The banks got us into this mess, and nothing else will get us out.

If you have knowledge about a certain area on the Westside, please chime in with your opinion. We all need to hear what bottom prices for SFRs might look like in your neighborhood.


johnnyb1 said...

Thanks for the heads up on Dr. Housing Bubble's "Foreclosure Reality Check". Happy talk about a bottom in the market at this time is ridiculous; trying to time the market bottom is like trying to catch daggers.

Anonymous said...

Two words: investment groups (domestic and foreign). They will eat your theories about the slow ride to the bottom of the Westside RE market for breakfast.

All cash offers will keep the prices from dropping to the levels you are predicting.

Anonymous said...

To Anonymous above...get real.

First, the days of investors buying >$1M SFRs sight unseen is over. Especially foreign investors. The bubble burst, the GBP are EUR are no longer 2.0 and 1.6. Petro dollars into Middle East and Russia are much lower.

When bubbles burst, people begin to act rationally. The investors you mention didn't keep the Nasdaq at 5,000. Almost a decade later and we are still >60% down.

Your theory is based in some fact. I'm personally aware of investment groups buying SOME real estate sight unseen, but it has been severally discussed auction real estate in the hardest hit, lower end market.

On a separate note, why doesn't anyone remember SoCal 1989 - 1997? (and that was before the invention of Option ARM, 50-year, Neg. Amortization lunacy.)

Anonymous said...

Anon 9:16 and 9:54

It's possible that foreign buying may help support a few select markets in which they are interested. For example, I have heard the East Asian buyers paying a large percentage in cash have helped brake the fall of prices in the Pasadena market.

However, foreign buyers have to be careful about the risks. Japanese buyers, both individual and institutional, bought U.S. real estate in the late 80's to their regret. The most prominent example was the Japanese group that bought Rockefeller Center in NYC (to howls of nationalist protest) and then sold it in the late 90s at a big loss.

On top of market risk, foreign buyers face currency risk. U.S. real estate is bought and sold in U.S. dollars. The foreign buyer has to convert his native currency into and out of dollars when he buys and sells. If the dollar devalues in between, he loses part or all of any increase in the dollar value of the property. The Chinese government has openly expressed concern about the danger a declining dollar poses to its holdings of U.S. financial assets.

Anonymous said...

Based on incomes, at the bottom I see 3/2s in Culver City around $350K, Santa Monica $425K, Mar Vista $325K and Venice $400K.
This Fall will be interesting in real estate and the stock market. Double Whammy.

Anonymous said...

425 in which part of santa monica?

Anonymous said...

for one, i don't that many east asian buyers would buy in west LA--most of the wealthy Chinese will be buying in Pasadena area bc there is a strong chinese community/rests there. how many chinese nationals (not chinese americans) do you see on the westside (not counting the UCLA students and post docs)?

Anonymous said...

Starters in 90405 Sunset Park for $425K. Hard to believe, but the big leg down for the westside hasn't started yet. JOBS...JOBS..JOBS...

Anonymous said...

@ Anon June 14, 2009 9:16 AM:

8 words: You have no idea what you're talking about.

Anonymous said...

@ Anon June 15, 2009 12:12 PM

Before sticking your foot any deeper into your mouth, you should do a little (light) reading once and a while. Apparently CNBC notes that investors are jumping into the RE game:

"Some analysts say the slide in home values in California has run its course thanks to buyers with government mortgages and investors snapping up foreclosed properties."


Anonymous said...

Anon said...

"buyers with government mortgages [...] snapping up foreclosed properties"

Yes. Some investors are using Fannie debt to buy cheaper homes in Palmdale, Riverside, etc.

Conforming loans (e.g. limits in principal) and tiny tax credits aren't going to do anything to sell the junk I've seen at >$1M in SM, Venice, MDR, etc.

On a separate note, it's a little too far South for me, but I just looked at Manhattan Beach online for kicks. OMG! Blood bath of epic proportion coming for South Bay. I've never seen so much inventory.


Anonymous said...


Are you a current westside home owner/RE invstor or westside real estate agent?

What's ur problem with home prices dropping back to a decent level at around 400k?

Anonymous said...

What a load of horse manure--any suggestion that rich foreigners are going to bail out this free falling, hyperinflated ponzi derived, market is just bull.

The fact that less than 10% of the households in L.A. County could afford a median priced house at the peak of the boom seems to still be falling on deaf ears.

There are thousands of homes on the westside that are inhabited by the original owners who bought their houses for $10-20,000 back in the 50's and early sixties. They will all be dying off in the next decade and there will be a flood on the market of these modest tract homes.

On the street where I grew up, about half of the homes are still lived in by these original owners. My parents have already passed away but there are a dozen homes on my block that still have the old neighbors, and they are all in their eighties now.

Prices are going to fall MUCH further and there will be a large supply of homes coming on the market in the next few years.

Anonymous said...

maybe they might just give it to their off springs, and the off springd will rent them out or live there rent free.

based on your gut feeling and having lived in the neighborhood, how much do you think the tract home will go for in a couple of years?

Anonymous said...

Oh yeah, the bottom is really hitting now...

LP: $699,000

Palms area of Mar Vista, to Charnock Rd x McLaughlin, to Havelock Ave (in the much maligned- on this website anyway- 90066), to the starter home on Emporia in the lovely Sunkist Park region, homes are selling for around 600-650K. And selling quickly.

So basically you all are saying this will change in two months, during late summer 2009. Hmm....

Anonymous said...

There is alot of talk about prices having much more to fall. I've seen some significant dips in the SF Valley but the west side is still prohibitively expensive. I'm reading articles that say $600k is a good price for a starter home. What?? I'm an engineer ("young professional") and make no where near the amount of money required for a $600k home. I imagine there are many people in a similar situation. Yet the price is still $600k! What gives? There are lots of great arguments on this site and drhousingbubble about price declines, but none have come true yet. It's always 1 year from now or 2 years from now with each new article. Again, what gives?

taylor said...

From WestsideREMeltdown, March 7, 2007: "I personally believe the latest speculative bubble is due to unravel much faster than most people think. By the end of the next selling season ( Summer of 2008 ) you will see declines of 45% in Santa Monica off of it's peak in August of 05'."


Meanwhile, we're putting off the house buying for a year at least. Going to rent a 3/2 duplex in Carthay Circle in the meantime. Hey, it's a renter's market out there...

Anonymous said...

I think ninjas are going to keep the Westside RE market at bubble levels (5x-10x income) with their awesome magic... because that's the only way prices are going to stay above the standard 3x income level.(Hey, and their Asians! there you go!)

It may take a year, or three, but it'll happen.

Anonymous said...

Ninja is an apt term, but I'm not using it sarcastically. Investors are like Ninjas, striking quickly when the timing is right. They are striking now as we babble about the deflating bubble, buying starter homes for 600K as fast as they are on the market on the Westside (not, however, the roach motels by the freeway- ninjas are way too smart for that).

Anonymous said...

i am also a young professional, and i just don't think that we have the consuming power to buy a house in CC/westide yet. It's just how it is. 100k will not cut it anymore on the westside. that's the new 50k. I don't think that we will be able to buy anything out here until maybe when we are in our mid 30s when we have saved for a few yrs and have the income to support a 600k home. prices will probably drop a little bit more, but probably won't go up for a quite a few yrs. so' there is no rush. if we really want to be homeowners, we will have to look at the valley and out east. it sucks, but what can we do.

Anonymous said...

i am from SF, and my folks bought a modest home 2/1 in SF for 200k in 1986. It is at 800k now (was at 950k during the peak), and will stay there. It will never go down, only up in the long run. Does not look like I can afford a home there anytime soon. This is the CC/westside but with homes at the 600k range. just expensive real estate out in prime areas. no secrets to it. no ninjas, foreigner buyers, REITs.

Anonymous said...

What a bunch of fools. Think Palmdale and Lancaster.

Homes went up there 3 times during the boom just like the westside homes did.

The bottom has fallen out of pyramid and the westside is doomed just like Palmdale and Lancaster.

I just laugh when I see my family $12,500 home going for over $600,000.

Such fools....

Anonymous said...

the tract home is not where the value is. the value is in the land and LOCATION.

Latesummer2009 said...

The bottom line is this:

1) Housing prices were fueled by speculative bubbles in stocks and real estate form 1997 - 2007

2) Wages have stagnated since the bubbles began.

3) Any jobs now being created, don't support current housing prices.

4) Many good US jobs have now been outsourced or eliminated.

5) California is still in a recession and possibly headed for a depression.

6)Jobs that are being created do not support current housing prices.

7)Foreclosures are at record highs and show no sign of decreasing.

8) The stock market has enjoyed a bear market rally fueled by speculators and will test market lows this fall.

9) Severe price corrections are migrating inward from the exurbs towardds the heart of the city

10) Credit tightening at the junbo level has almost choked off the higher end market.

11) The majority of sales activity is in the foreclosure arena, where "one and done" creates a few move-up buyers.

12) The RE food chain is now being eaten away from the top (Jumbos) and the bottom (one and done).

13) Consumers are not making big purchases, fearing their job picture is uncertain.

14) FUNDAMENTALS such as mortgage/income and sales price/rent will revert back to historical norms.

15) Every other real estate bust has affected all levels of the real estate market, and this record boom (1997-2007) will be no better, if not much worse.

16) Percieved deals ($600 for a starter) seem like a good deal but is nothing more than weak hands looking for homes during the traditional selling season.

17)Too many headwinds and facts to combat gut feelings, hopes, spin, and DENIAL.

You can add more if you like. Be careful what you buy or your going to get BURNED.

Anonymous said...

I like that 17 point list, latesummer. I will recite something similar to your list down at the coffee shop Friday to my significant other's parents who wonder why we are still renting and about to sign a one year lease.

Anonymous said...

Before the bubble started in 1997, houses in Culver City were in the $200K's range. Every financial bubble pops and goes back to where it began. Don't let the real estate agents tell you that this area is different, or it won't go down, or this place is hot, blah..blahh. Drive through Culver City, Mar Vista, and Santa Monica, and look at all the increasing amounts of for lease signs on commercial properties.

This is the biggest financial, housing, credit, bubble the world has ever seen, and it will be the most brutal downturn ever..

Anonymous said...

I think someone wrote this previously, but I think that once 80-100k jobs start to go on the westside, prices will fall. doesn't matter if dad/mom will provide a 20% down payment gift because they won't be able to pay mortgages without jobs.

Anonymous said...

can someone pls tell me who are the 650k homes in CC/Mar Vista? Who are these people that are keeping the prices so high?

it just makes me hopeless that folks who make 140k cannot buy a starter home in CC.

Anonymous said...

these prices just makes me wanna holler

Anonymous said...

All of this hoey about prices falling is propagated by people who do not make enough money to live on the Westside. The myths are based on several things, but on thing is the "3:1" price to income ratio. The "market will reach 300K median prices on the Westside" crowd proposes that local resident incomes will drive the prices down, however, this conceptualization is off the mark.

I live in Venice, and there are two types if family/people in my neighborhood (the Triangle district): 1) professionals making very good livings and 2) legacy families holding on to homes passed down for three generations.

The professionals I know- and we have a bunch of block parties every year, so I learn a lot about my neighbors, are all making solid incomes. What is solid? Solid is 200K minimum. Most are making much more than a 1/4 million per year. What do they do? Doctors, lawyers, producers and advertising, to name but a few. There are also a lot of people who run their own businesses that are not easy to group (i.e. clothing, etc.).

I see so many whiners on this board bemoaning, "Who are these people who can afford these homes?"- I'll tell you: Many are from out of state, some come from rich families but most worked their asses off scraping to get to the top. Now, the fruits of their labors have ripened, and, being able to pick and choose where they want to live, they choose to live in Venice Beach. And they pay whatever it takes to do so.

The neighborhoods in surrounding areas are being saturated with the same people, and the legacy families are moving out of state or inland, to homes they can afford.

Median incomes are going UP, not staying flat, because of migration. It is simple economics: workers who are priced out of neighborhoods need to move on and find a place they can afford. Palmdale would be a good place for the folks who are making 50K to buy. That is what they can afford.

Finally, the legacy families in Venice are, I'm sure, representative of the contingent who decry this whole process of homes in desirable areas becoming more expensive. They love all the equity they suck out of their million dollar "tract home" but they bitch and whine about how neighborhoods are not affordable.

They will move- this year or later- and a family with a combined income 6x's their income will move in. The lawyers, the doctors, the MBAs, etc., because they can afford the 700K homes.

Flame me all you want, but some of you should have really thought about what you wanted out of life (i.e. home ownership on the Westside) and then planned your career accordingly. Or, an even better solution to your woes, go buy in a neighborhood you can afford and quit speculating about the crash of Westside home prices.

Anonymous said...

Anon 7:50

You are pretty funny. I used to live in the very affluent Bellevue Washington near microsoft where my husband worked. I was convinced that the people nearby were all earning more than my husband because of their profession and lifestyle. Later I found out that most were earning half of what he was, they just spent more. People in affluent areas can just as easliy build their finances on a house of cards as in less affluent areas. You might want to get a copy of "The Millionaire Next Door" and read it. At my husband's work they just did another round of layoffs that cut 5% accross the board including mid career high earning professionals. Many of the people he works with live in Manhattan Beach.

Time will tell and perhaps you are right. Maybe everyone earns lots of money and no one in high end areas is overextended. Maybe they don't mind losing money each month by buying instead of renting. That is probably why traditionally jumbo mortgages have defaulted at higher rates than conforming loans and carry higher interest rates to reflect that risk. Time will tell, but home prices move slowly and are sticky, particularly when the government interferes to try to prop up the house of cards.

Jenny said...

I know people moving into my Culver City neighborhood are making more than the people moving out. I run the neighborhood watch group, and my husband is a coach (he is a retired investment banker, and he is always talking with people about their financial situation). All the parents moving in can afford 600K or 700K homes and even more. It is funny how everyone keeps saying they can't afford them. They can and do- it is simple. The old neighbors do not make enough to live here and are moving out.

Several of our neighbors are easily making over 300K- probably much more than that. Just last week the newest member of our block was appointed to Obama's working group for energy planning (he owns his own international manufacturing business, he is Chinese and used to live in North Caronlina).

These people just want to be in CC for the schools, neighborhoods and quality of life. Beverly Hills is passe and the Westside has been "it" for years now. I wonder why no one asks "who are these people who buy in Beverly Hills?" Simply put: they are people who have high paying jobs!

Call it the "Westside Luxury Tax." People who can't afford it shouldn't move there.

Anonymous said...

I live in the Palisades and was told a few days ago that prices have dropped 25-30% since the peak.

Since I buy properties in pre-foreclosure BEFORE they go to auction, the first thing I did when I moved here was check the NODs. There were four in the Palisades. Two years later there are many more.

At one point in time (two years ago), the Palisades was one of three communities in the U.S. that had not yet been affected by the housing downturn. Times are different these days . . .

I make well over that 200k, and I'm waiting before I buy.

One more thing: When I first moved out here I was told by real estate "professionals" that the housing crisis in the East wouldn't affect California. So I tend to be skeptical of the "but we're different" crowd.

speedingpullet said...

Call it the "Westside Luxury Tax." People who can't afford it shouldn't move there.

Wow 0_o

Anonymous said...

All these people (i.e. Jenny and Anon 7:50am) are protesting a tad too much and getting a little defensive. Perhaps a chord has been struck and they're scared of the imminent crash in higher-end areas?

Jon H said...

Hi People-

Please help me understand this, in light of your strong opinions about the market going down:

MLS#: 09-378205
LP: $649,000
DOM: 2

Using Zillow, the above property has the following past sales history:

Sale History
03/20/2009: $584,074
03/03/2005: $500,000

It is now listed at over 60,000 more than it was sold for in March of this year.

I'll keep my eye on it, but, if it is like other CC starter homes that are in the 600-650 range, it will sell fast.

I'm with LateSummer09, but this and other market behavior tends to contradict what a lot of you are writing here..

Just for the record, I am NOT a realtor, and I actually find those individuals who call posters with minority opinions on this website (i.e. the above arguments about people with money moving into these neighborhoods, thus substantially weakening the prophesied home price crash to 1997 levels) as "realtors" show defensiveness, not the other way around.



Anonymous said...

I think it's hilarious that the above poster is using a BANK-OWNED, recently FORECLOSED house that's been listed for only 2 days to prove his point of how higher-end areas seem to be increasing in value. Let's see how much this REO house sells about funny anecdotal evidence

Jon H said...

Anon June 18,2009 12:31 PM

I think it is hilarious that you construed my post in that manner. I was simply asking why this occurred. Specifically, I wondered why a bank owned home would be selling for so much more than was owed on it (reference my original post, which includes previous sales data, and this time around take the time to read it carefully).

It is time to take that chip off of your shoulder and give me an explanation, should you have one.



speedingpullet said...

Jon, the bank is trying to make a bit of cash out of the deal - give it a few weeks and they'll start bringing the price down.

Or, it will sit there for a few months, until the bank starts bringing the price down, to where it will sell.

Or, even a year or so, depending on how swamped the bank is....

Either way, hold your fire, eh? :-)

Prices aren't going up in the foreseeable future, and the longer you wait, the more sure you can be that they've hit a bottom.

Jon H said...

The bank owned sales I have seen typically start low- very low- to get multiple buyers interested (with the hope that people will bid up the price). That is why this one seemed very unusual.

I am still trying to figure out the bank's actions on this home. The theory supported on this (and other) websites suggests that banks would be interested in moving inventory, b/c there will be a glut of REOs due to the second wave of foreclosures.


Lefty said...

We're living in a small mid-Wilshire condo while we happily watch the Westwood, Brentwood and Bel Air house prices in the $1.5M-$2M range drop. We want to live in that area.

We currently have $900K in cash plus the value of the condo (conservatively at $150K) to spend; this is all besides our retirement savings. We may borrow up to $300K more. We used to also have a small home in Valencia that we sold for just over $450K a little over a year ago. Today it's likely worth about 15% less.

The longer we wait, the further the home prices drop in our dream area. And who knows how much longer our wait might be -- 3 months? 6 months? 12 months?

Anonymous said...

i've never heard that CC has good public schools. people making over 300k do not chose to live in CC. Venice yes, but not CC. Those folks like Westwood, Brentwood, Palisades, etc. not CC.

CC is just overrated at this time. trust me, house prices will go down in CC. CC is the ghetto for successful doctors and corporate lawyers. schools suck, even in santa monica public schools suck.

Anonymous said...


What age range are you and ur wife in? less than 40 or greater than? That's quite a bit of cash--and that doesn't even include your retirement--are you a drug dealer or in the industry?

Anonymous said...

"the professionals I know- and we have a bunch of block parties every year, so I learn a lot about my neighbors, are all making solid incomes. What is solid? Solid is 200K minimum. Most are making much more than a 1/4 million per year. What do they do? Doctors, lawyers, producers and advertising, to name but a few. There are also a lot of people who run their own businesses that are not easy to group (i.e. clothing, etc.)."

The above is full of shit. Anyone making over 200k minimum does not settle for Venice. Try Westwood, Santa Monica, Brentwood, etc. It's the wanna bes that drive up the Venice prices with over-leveraging.

And stop being such a snob.

speedingpullet said...

And stop being such a snob.


Jenny said...


You are such a snob! Stop posting useless drivel, do us all a favor and present facts. Of course, this will be difficult because you are smugly self-righteous about your opinions on different Westside neighborhoods.

speedingpullet said...

Whatever, Jenny.

Crowing about how much you make, and how much your neighbours make, and how relieved you are to see people priced out of their neighbourhoods - so that people like you and your Investment Banker husband can overpay for them, and feel all good about it - makes you a snob in my book.

And, I'll stop posting 'useless drivel' when you actually come up with some real stats to prop up your anecdotal stories.

Anonymous said...

Jenny, you ask for real facts but where are YOUR real facts. The only thing you provide is that your husband talks to your neighboors and asks them how much they make.

And I quote:

"my husband is a coach (he is a retired investment banker, and he is always talking with people about their financial situation)"

Yeah, that seems like some hard-core data you got there...

Anonymous said...

There is plenty of data published on the average income in various neighborhoods on the West Side.

The highest income neighborhood is Santa Monica North of Montana.

Culver City is way way down on that list.

I think the bulls would say that it is true that the average income in Culver City is way low but that the average income of the people moving in to Culver City and buying right now is very high - bulls may be right but there is no proof

I think it is fair to say that doctors and lawyers dream and fantasize about getting their kids in to the public schools North of Montana in Santa Monica - NO ONE fantasizes about Culver City schools

But doctors and lawyers can not afford North of Montana and never will be able to so the question is, what is their second choice?

They can move to Calabasas and get a huge house cheap - with great public schools - but Calabasas is really far from the ocean.

I think that many people on this blog can't understand why docs and lawyers who are desperate for 90402 would as their second choice choose Culver City - well I don't defend their choice i don't think it is smart but i think they choose culver city instead of calabasas because culver city gives them a super short commute to their jobs and calabasas is super long

So my point is, people would rather have a small old crummy house and live next to questionable neighbors in Culver City instead of a nice bigger house in a safe neighborhood in Calabasas. This may not be smart but it is what it is

Again i am a bear, but you have to talk to some of the high income people moving to Culver City to get the truth

Anonymous said...

I haven't read so much BS in my life about Culver City or 90066. I'm the person who lived for over 40 years in 90066 and I can tell you that virtually all of my childhood friends moved OUT of 90066 the first chance they had!

Culver City is only slightly better in some ways than 90066 but NO ONE who grew up there believes that ANY house in Culver City is worth a high six figure price.

The lots are small, the streets are narrow and the houses are modest.

All of you people who spent $450,000+ during the last few years on your home in CC or 90066 are screwed.

Lefty said...

Neither... and that gives you your answer.

Smith said...

I live in North Santa Monica. But I bought here years ago when it was affordable.

My nephews can't afford North Santa Monica and never will be able to afford it so they have to choose between the Valley or Culver City

Why don't you try commuting from the valley to Century City a few times ? I'll tell you something - try it a few times and you will be DYING to live in Culver City.

My nephews aren't stupid they know that Culver City is dangerous and scummy and dirty and that the schools are not as good as the valley. But that commute is so terrible that they will suck it up and buy in Culver City. There is no choice

Anonymous said...

"There is no choice."

Really? Your nephews have NO choice?

It's that kind of herd mentality that has destroyed the economy of California and our country: "Buy now or be priced out of market forever."

We have so many choices in this country that it causes some people to do really stupid things!

Well, we as a society are paying for OUR CHOICES now.

Anonymous said...

This is the most hilarious thread I've read in years! :-)
It's like traveling in time back to 2006. Some gems:

"My nephews can't afford North Santa Monica and never will be able to afford it"

"Call it the "Westside Luxury Tax." People who can't afford it shouldn't move there." <-- Culver City?!?

"All of this hoey about prices falling is propagated by people who do not make enough money to live on the Westside"

"It will never go down, only up in the long run"

Pure comedy! Also it seems like perhaps the AARP alerted it's members to this blog, because it seems like at least a couple posters here are retired. And probably terrified.

For anyone on the fence, don't listen to anyone here. Do some actual research into the local RE market, global financial markets, nat'l and local economy. A lot of folks on the west side are getting destroyed due to poor/nonexistent financial planning. Don't be one of them.

Now, back to the comedy!

Anonymous said...

anon @ 4:08 here... I almost forgot. . .

Full Disclosure: I am eligible to join the AARP, and I *can* afford to pay the West Side tax. :-) I'm just waiting 'till it's lower. Which it will be.

Matt said...

The high end will be seeing endless Japan-style deflation over the next decade. Think 10-15% drops on a consistent basis year after year after year. Baby boomer entitlements will slowly squeeze the life out of what little vibrancy is left in the economy, especially in CA. And as far as the westside goes, the entertainment industry is steadily shrinking - the pirates keep on eating more of that margin everyday.

Anonymous said...

SMITH: "Why don't you try commuting from the valley to Century City a few times ? I'll tell you something - try it a few times and you will be DYING to live in Culver City."

You have to be kidding, right? Having lived in L.A. for over 50 years I can say that I have a pretty good idea about how horrible traffic can be.

The 405 commute is difficult but no sane person would mortgage their future away buying a bubble priced POS in Culver City to avoid commuting over the hill everyday.

This board has really become ridiculous.

Robert said...

Economics 101: First day of class we learn about the Law of Supply and Demand.
1. Malibu has over 400 homes for sale which is 40 months supply. Eight months is normal in the USA. How many more stand behind those 400. The average asking price right now on these 400 is about $3,000,000.

2. Santa Monica has about 20 months supply on MLS. How many more stand waiting to be sold.

3. The State of California today announced that the unemployment rate is 11.5 %....and that counts only
those that are still looking for work. The person who sighted "The Millionaire Next Door" neglects to consider all the unemployment comes from their small businesses. As others have mentioned, take a walk down Montana and other similar shopping streets and one can see all the shuttered businesses. Can anyone, I mean anyone, say they are doing well. Are new businesses opening.
4. Then we have myriad of other factors such as unaffordable health care. Almost every company both large and small is ending its program. Ever walk into the emergency room at UCLA or Cedars? That is the most expensive medical care that unfortunately all of us pay for whether we have our own health care or not.
5. There are many other factors but the one which concerns me the most is the lack of optimism in our many know of offsprings and others who just graduated college, received an MBA or a doctorate and cannot get a job. The WSJ just reported yesterday that many of our brightest are moving abroad. Who at 22 or 25 think that the future of the world lies in THE USA. IT'S CHINA AND WE ALL KNOW IT..

So, speak all you want about piddling differences between CC or NOM, our problems are so much larger than that. Can anyone say that the USA today will ever be the USA of 1965 or 1995.
It's downright scary and that's why the banks won't lend and the people won't buy.

It's supply vs demand.

Anonymous said...

Ah, no the future isn't China. All the brightest Chinese are still coming to America to do post-docs and fellowships.

Where I work (local teaching and research hospital), our building is FULL of Chinese PhDs and graduate students. These people are the brightest and most motivated educated people from China.

They aren't coming to America because there's less opportunity here than China.

China is a dump compared to America (and lets not even talk about the lack of freedom and choice, etc), and China will sink like an anchor if our economy hits the skids. What does China make except cheap knockoffs?

China isn't Japan and probably never will be. In other words, name me a Chinese car that inspires confidence like a Lexus, Toyota, Honda or Acura.

Or name me that Chinese electronics company that rivals Panasonic, Sony or Hitachi.

Anonymous said...

LOL!! Since when did living in Culver City signal you had "arrived"? It is really no different than zips directly to the east other than it is "white". Maybe this is what you are all after, because you have no fundementals to support paying
600k plus to live in a marginal neighborhood, with marginal schools, on small lots, and small houses. Keep feeding your own delusions.

Anonymous said...

Oh, and by the way, people with any means all dont send their kids to public school; culver city or otherwise.

Anonymous said...

I suggest you read "The Millionaire Next Door" before commenting. The book goes in to the demographics of who accumulates wealth, and it is the savers, not the spenders. American millionaires often live in modest blue collar neighborhoods. They live well under their means and accumulate wealth through saving and investing. Doctors and Lawyers have a low percentage of high net worth people int heir profession because they usually spend more. Read the book, he gets in to this deeper.

Anonymous said...

A bunch of people making less than what is required to live in a highly desirable area, complaining about how stupid people who have the money to do so are. How unique.

Perhaps we should subsidize all of you really smart, hard working, sub-100K salary people so that you can step down from your soap box? You are all so brilliant, we all know you could have done anything and made endless amounts of money if you wanted to . I'm sure those people who worked their asses off and developed skills and competencies necessary to land a high paying job will not mind at all.

Oh wait, none of you think living in CC or the 90066 is worth it, subsidy or not. "The schools are bad," "there are tract homes," "your neighbors are gardners," it sounds terrible! Whew- I no longer have to worry about the people with incomes too low to own on the Westside actually wanting to live here . Apparently, you all want to live in Westwood. You just save us miscreants, who actually make enough money to afford the Westside, a ton of dough.

Dr. Housing Bubble

Anonymous said...


Let's put our money where our mouths are. I would like to put down a $500 Visa gift card that the median home price in CC will be down at least 10-15% this time next year.

Anyone want to take the other side?

Anonymous said...

Dr. Housing Bubble: "...You just save us miscreants, who actually make enough money to afford the Westside, a ton of dough."

First, I doubt that you are THE "Dr. Housing Bubble" since he wouldn't write a mindless rant like you just did.

Second, you probably are one of the newbies in 90066 or Culver City since I've noticed that many of the new arrivals to my humble neighborhood are genuine snobs.

It's amazing how thick the entitlement attitude is in people who are living like the rich but in reality are just over-extended.

It must be terrible to realize that you just spent $825,000 on a house that is going to be worth half that in a few years. So rant on all you want about us smart people who didn't mortgage our futures away on a really bad bet.

speedingpullet said...

LOL - I'd have to agree with you - I very much doubt that that is THE Dr Housing Bubble, because s/he'd be snorting coffee through nostrils at some of the comments here ;-)

If you think I'm a bear - DrHB is an 800lb grizzly in a room full of teddy bears....

Anonymous said...

Yes, there is some validity to the argument that there are truly a lot of high income people who want to live on the westside. In theory, this could keep demand high and prevent further crashing of prices.

Together my girlfriend and I earn several hundred thousand dollars per year, and yes, we were looking for homes not just in Brentwood and 90402, but also Venice and MDR.

And yes, there are many others like us. That is, hard working, well-educated people.

But, guess what, we are not stupid. We rent a place in West LA, and are waiting.

To those who point to all the hard-working lawyers, doctors, business-people, etc. Yes, there are a lot of us, but most of us are also savvy (either through education or street smarts) not stupid. All those homes b/t $1.0M and $2.5M are going to converge to around $1.0M and less.

Not quite the westside, but check out Manhattan Beach sometime. A very desirable place with many high-earners...but years, yes years, of housing inventory. Same thing is coming for the westside, especially Venice, Culver, Ocean Park area, etc. Yes, in very, very specific areas (e.g. the Brentwood flats (e.g. where OJ lived), Beverly Hills north of Sunset, but south of the hills) will hold in value, due to very limited supply, but every other area is going back to 2000 - 2002 values. Back to before the Option-ARM, pick-a-pay, negative amortization, no doc, lunacy.


Anonymous said...

Could some pls break down the CC/Mar Vista in terms of zip code and level of desirability?

At this time, I feel like some people are taking about apples and others are talking about oranges.


Anonymous said...

Anon June 20, 2009 3:57 PM,

It is really convenient to assume that everyone who contradicts you either A) bought a house at the height of the market or B) is living above their means. It must allow you to feel justified in spewing out statements like, "It's amazing how thick the entitlement attitude is in people who are living like the rich but in reality are just over-extended."

I can only guess, (but that shouldn't matter, b/c apparently opinion is sold as fact here all the time) but I'd say you actually do not make enough money to live on the Westside at current (even declining) housing prices. Therefore, like many other minimal earners, in order to reduce the cognitive dissonance about your trying to live in an area you cannot afford, you cling tenaciously to the belief that anyone making enough money to live on the Westside must be on the brink of financial ruin.

Sadly, your theory is a fantasy- a psychological construct of your own making- that doesn't mesh well with reality.

Most of the over leveraged buyers simply didn't make enough money to live on the Westside to begin with, not the upper income professionals.

Anonymous said...

5:56 AM--So you're saying that only on the Westside did people who bought all of those bubble inflated houses have the real income to afford $750,000 for a 1955 3/1 tract home. And the reason that the home prices will not fall through the floor is because the financial meltdown that the entire world is experiencing won't affect the Westside?

Ah, I think that you've got your head in the sand.

Anonymous said...

conceptually I don't see how "starter" homes can be priced at the level of a successful dr/lawyer/engineer. By definition aren't starter homes geared for professionals at the "start" of their career (salary commensurate)? I don't discount the fact that there are very successful young people but cities so full of them that "starter" homes are priced so high? 10% unemployment, biggest recession, impending doom (foreclosure tsunami) yet starter homes in culver city are still $600k! all the arguments describing a crash of epic proportions make complete sense so I don't understand why the slide down hasn't been more extreme?

Anonymous said...

4:40 PM: "all the arguments describing a crash of epic proportions make complete sense so I don't understand why the slide down hasn't been more extreme?"

Just wait.

Remember, back in 2007 most people scoffed at the idea that we were headed for disaster.

Anonymous said...

successful yuppies make about 200k/yr. yuppies who are DINKS would have annual income of 400k. Starting salaries for recent graduates from top law schools are about 180k plus 15k plus. avg top law school grad is about 27 yrs old.

docs make more than attys

engineers make pretty shitty money to start off with actually. starting salaries are only about 65k.

Anonymous said...

Instead of citing hypothetical salaries, it would be more useful to cite some real data.

This fantasy that there are thousands and thousands of households with $200,000/yr income is hillarious.

Everyone knows that the current RE prices on the Westside were caused by the Ponzi scheme bubble that has burst.

That is, prices in the Westside went up parallel to those on San Bernardino and Riverside County. The current prices on the Westside (and all other premium zips in California) are not sustainable or based on real world market forces.

In other words, houses still are too expensive.

Buy know and forever be underwater.

Anonymous said...

I agree - most of the west side has been inflated by liar loans and people who took out loans of 15x their annual income

most of the west side is a disaster in waiting - do NOT buy - you will get smoked

I for one am waiting for the 90402 to come down in price before I buy - that is where I want to buy and I only need it to come down 20% from here for me to be able to buy