L.A. is hit hard as home prices continue their record-breaking fall

[Liberal_in_LA]

http://www.latimes.com/business/la-fi-homes29-2008oct29,0,3355998.story

L.A. is hit hard as home prices continue their record-breaking fall

Figures for August show a 26.7 % decline for Los Angeles and Orange County compared with a year ago. The numbers from 20 metropolitan areas show a 16.6% drop.

By Peter Y. Hong

8:46 AM PDT, October 28, 2008

U.S. home prices continued to fall at a record-breaking pace in August, with the Los Angeles area posting among the sharpest declines, according to a prominent index released today .

Every one of the 20 regions in the index reported an August price decline from August 2007. Phoenix's 30.7% drop from the previous year was essentially matched by Las Vegas, which posted a 30.6% decline from a year ago.

Close behind in their August annual price drops were Miami (28.1%), San Francisco (27.3%) and San Diego (25.8%).

[phantom power]

1. Lots of people suddenly 25% upside down on their mortage.

[slackmaster]

2. People get hurt when home prices go up, people get hurt when home prices go down

And some people get hurt when home prices don't change.

:shrug:

[LisaM]

3. Housing prices were inflated and banks were giving mortgages

that were much higher percentages of peoples' incomes than they could realistically sustain.

While house prices were soaring out of the range of the average citizen, no one seemed willing to discuss a way to contain them. I feel bad for people who are losing their houses, but I was never able to enter this market to begin with. There were two-bedroom houses in my neighborhood (we have a TINY, run-down rental) that were over 450K. It's not realistic to expect people to be able to pay that. This was all really predictable.

[Terran]

4. home prices in SoCal were ridiculously inflated

My mother still lives there in an unincorporated area northeast of downtown. I know that very average houses in her older neighborhood (1940's and later) were selling a few years ago for $800,000-$1,000,000. These are homes that, if you put them where I live in Missouri would sell for maybe $125,000 or less (I paid $90,000 for a 100-year old three bedroom house, 2100 sq. ft.). Even a 25% drop still leaves prices astronomically high compared to the rest of the country, except maybe San Francisco and Manhattan.

For a long time it seemed like her house was a potential gold mine, but really, this couldn't go on forever.

(edit: typo)