Good its ridiculos out here for housing prices. My street has about 7 million dollar homes on it. But if you put these little shacks in another state maybe 150k-200k. For example my mother in law bought a 3 bedroom house in 98 for 190k now its worth just under a million in less than 10 years? WTF! How is someone supposed to be able to afford that...oh yeah it takes multiple families living in one house. I hope prices go way down its pathetic out here.

As far as the story 700k for a freakin townhouse? Come on....seriously people.

Yep, it's definitely going to be a buyer's market for the foreseeable future now. At least for those who can afford it, haha (no, I won't be able to unfortunately)

@Nemesis_Enforcer: You must live in LA because it's the same deal in my area. I am salivating at these price drops and can only hope it gets better/cheaper.

@ceejeemcbeegee: Yes unfortunaley I do live in LA..I am counting the days till I can leave this hole behind.

I think it absolutely sucks that these shady lending practices made some lenders and brokers so much money at the cost of screwing hard working people. I know of one broker alone who at the age of 25 owns 7 homes and over $10mil in cars by 'helping' people get a sub-prime loan.

And they all totally got away with it....

No kidding -- WHO is able to afford those prices? Mass manufacturing is shrivelling in this country, mining is dead, the technology sector is bleeding, and we now import almost a trillion dollars more than we export. I would not bank on six-figure incomes to last much longer, nor $500K houses being the norm.

Never take free "goods" as an incentive. They tend to be the cheapest brand/model available that meets the description of the product, might even be refurbished or some other "second."

I am a real estate agent here in Los Angeles and have been in the business since 1999 and I have never scene it this bad, I already know if many offices that have shutdown agents who are looking for jobs even restaurants have closed down because much of their client'el were people in real estate, I think it will just get worse. I have homes for sale in great areas at low prices and still no buyers or if I do get a buyer its impossible to qualify.

These kinds of stories always make me feel like I'm lucky it's only as bad as Massachusetts around here. It's definitely expensive, but not like that.

For more on this, take a peek at the Irvine Housing Blog (www.irvinehousingblog.com), which details sales in one particular southern California area. Each day features a different home, with purchase price, loan information, and selling info. In addition, the writer includes periodic analysis of prices relative to income, cost vs. rental cost, etc. Really a very interesting read, although it'd be depressing if I lived in that market.

Builders are hesitant to give cash discounts because it lowers the value for homes they sold at higher prices. Then those buyers are all over them for a refund. They'd rather give away the freebies then record the sale at a lower price.

@frankieman70:
I lived in OC most of my life. Still own property there in HB. If you've only been in the business since 1999 then you are a relative newbie, The downturn in the 90's was bad. Will this downturn be worse? Quite possibly. However, historically SoCal real estate has never lost more value than it had gained since the previous downturn.

My problem is going to be trying to sell my recently deceased mothers house out there in this market. She paid around $250k for it in '96. It appraised for $750k in 2005. Crazy, just crazy.

California was\is a cesspool of over-priced homes.

did you just shill your dead mom's house on a comments board? icky...

Around LA, all the unsold luxury condos have been converted into rentals. No one wants to spend $500K+ on 2 bedroom condos located in the middle of the ghetto. Developers like to call it "urban living". I call it skid row. :-)

Bad news for Texas too. All the homeless Californians are coming here. *shudder*

I live in So Cal, the I.E. to be more specific, and even though there are hardly any homes that my wife could afford we can't get a loan because of the strict guidelines. My wife is an independent contractor and goes off stated income but there are NO lenders giving loans to people with stated income.

@synergy: Ew. Texas.

My mom's house is worth 800k or something because it stood up so well after the Earthquake, and she bought it for 150.

I do hope housing prices keep falling because I would like to have a permanent address again. In as much as you save a lot of money (theoretically) by renting in L.A., you lose the ability to put your name and address on official documents because you don't know when your landlord is going to remind you that you're on month-to-month, and he can make more for your unit.

Wow, I don't think I ever heard a single complaint from any real estate agents or loan brokers when things were skyrocketing.. You honestly think that when houses were selling for 750k and closing in 3 days that you should still be entitled to 6% of the costs.. So, hopefully you socked all that money away! Same with the brokers, whole sold subprime loans. They didn't complain about the ethics of it when they were getting commissions and fees.

Why are the first two words of this article "Bad news" ? If the price of a gallon of gasoline goes down, it's good news, but if the _MUCH_ larger expense of housing goes down, it's "bad" news? This market correction puts a house back into the reach of those of us who (like many consumerist readers) saved our money, didn't buy into the tulip bulb, err, house buying frenzy, and are looking forward to purchasing a house for about what it's worth (i.e., wherein the monthly cost of ownership is roughly equal to the monthly cost of renting).

@Sudonum: However, historically SoCal real estate has never lost more value than it had gained since the previous downturn.

That's what pisses me off the most about this. Housing prices may drop slightly, but they will never go down to where they were before everybody went bananas, and people like me will never be able to afford a house, even with an "exotic" loan, thanks to those idiots who just couldn't wait.

Not that I wanted to get stuck in LA for the next 30 years anyway, but still.

You know, maybe if all of these freaking developers didn't build houses in excess of demand, there would be a more stable housing market. Seriously, I hate them, I hate them so much. Especially when they lobby for tax breaks to build poorly-constructed crap on flood plains. OK, I feel better now.

I like how everyone throws in a potshot against LA in their posts. It really is not that bad here, sure Irvine may be suffering, but that's not LA now is it?

Technology sector bleeding? 100k jobs disappearing? I get offers everyday and have more work than I can even handle. If anything there is a shortage of qualified tech workers. At our company we have been searching to fill 5 positions for months and have had no luck.

How about this kids, if your not making enough money, do something about it and learn a new skill or make yourself indispensable to your current company. If you can't afford a house, DON'T BUY ONE. Wait, save your money, make it work for you, then buy one when you can friggin' afford it.

And finally, if you do not currently live in or have lived in a zip code beginning with 900, please do not talk about LA like if you know everything about it, you have not lived here, so stop talking out of your ass. Thanks :)

I don't doubt Playa Vista CONDOS are going for 700K and up. They RAs are pushing for the freebies so they can take a bigger cut when they wave their hands to "earn" 6% of the closing price. There's also the magical "$10 rebate" after purchasing the house. You still have to pay property taxes on the higher price and the RAs still get the higher cut.

Plus, who wants to live on a methane time bomb? That whole Ballona Creek area has years of organic matter festering underneath those Playa condos. It's no wonder the underground parking garages have methane vents to prevent dangerous buildup (LA Time article from a few years back, I'll need to find that).

This is not bad news at all - let's hope the prices decrease even more!

@BobTheBoozer:

As far as I'm concerned, if one city isn't separated from the next city by undeveloped areas at least wide enough that you wouldn't be inclined to walk between the two cities, it is just one city. Go ahead and make any administrative distinctions you want, but people are going to keep saying they're from >central city of metropolitan area<.

What people don't realize is that all these "new home blowouts" are taking place in godforsaken places like Saugus, Canyon Country and Lancaster.

No one in their right mind would want to live out there anyways... and that's where all the crappy building is going on anyways.

Consider it a huge wave that crashed in suburban LA... and trickled out to the desert areas... and is now slowly receding back to the ocean.

Haha! Nice, Crazytree!

@frankieman70: I know there was a huge influx of people becoming real estate agents in the last few years here in LA. A buddy lawyer of mine tried to cash in on the supposed goldmine by becoming a real estate broker. Needless to say, he's lawyering again.

Another problem in the past few years was amateur real estate speculation - some amateur investors purchased multiple homes at inflated prices (thereby inflating the price of all houses on the market) with the belief that they would be able to turn a profit. Those guys are getting majorly screwed right now too.

Los Angeles housing prices are ridiculous, though. I live in an apartment now. I figure as long as my rent is less than the interest I would be paying on a mortgage, I'm still coming out on top.

Technodestructo@

Irvine is quite a distance from LA proper. If you had said long beach counted I'd be all for that. It's a bit like saying the Hudson Valley, or northern Jersey, is part of NYC.

BobtheBoozer- The housing market in LA and the surrounding area is such that 5-600k is a normal home price. With an income of 100k home ownership is unreasonable. Someone would need to earn closer to 150-200k a year to afford a home in that area. Even with joint incomes most people would be pressed to make kind kind of money. I certainly don't.

When it comes time to settle down I won't be able to stay in the LA area. But if you can suggest jobs where I can make 150k + a year and have a reasonable expectation of being able to see my home each day, as opposed to living in the office, I'm all ears.

@BobTheBoozer: The only problem about the whole "if you can't afford a house, then don't buy one" (even though I fundamentally agree with it) is that it doesn't address the issue of affordable housing.

It kind of sucks that a school teacher can't buy a house on his income, despite the fact that school teachers in this area are some of the highest paid in the nation.

I don't have any solutions, though. It's a complex world we live in.

I am happy a new house will be coming my way in late 07 to 08 in a former edge city. Not in middle of nowhere locations.

I must be odd, I want to live in the middle of nowhere LA (Currently San Diego). Unfortunately, I still can't afford to buy a house. So instead we'll rent when we move in 08.

The collapse of the SoCal market should be absolutely no surprise to anyone living there over the past 10 years--the inflation of prices was simply unsustainable and the market lacked fundamentals, driven by wacky loans, deceipt, and idiocy. And now the correction has arrived. I second the remark to check out irvinehousingblog.com, plus the L.A. Times has an excellent blog called LaLand that has been tracking the more recent developments from the beginning of the year on.

@Crazytree: Exactly. And anyone who buys now is nuts--this is just the very beginning of the correction. Only the most desperate have walked away, while many sellers are just going to bide their time. Until prices drop. And drop. And drop. Expect a correction of 30-60%. And that might be conservative, for some SoCal locations.

@spiderjerusalem: I hear you, but you know that there are still tiny bastions of rent-controlled areas, even in West L.A., as long as the building is over 30 years old. Rent raises maxed at 3% annually= a sweet deal. I lived in a 1-bedroom Century City for $875 for 6 years, and a guy who left when I arrived was paying $575 after living there several years as well. Either way, renting in SoCal is the best (and only) option for a large swath of the population right now.

@brennie: nope, giving an example.

Good news for Southern California! Anything that slows down sprawl is great for the rest of us already here.

It's just a case of rampant development selling us a bunch of ugly houses we don't need, while destroying open space and congesting traffic at the same time.

I love how, even is this admittedly crazy L.A. bashing market, there is a rush for everyone in a 100 mile radius stretching well into San Bernardino to identify themselves as Angelenos. It's a bit part of the problem. People desperate to pay big bucks for the right zip code and phone exchange.

on a practical note, someone brought up the issue of schoolteachers. It's a huge problem and one the city legislature is looking at through tax breaks and incentives. the teachers can't afford to live anywhere close to their schools. As a result, the good ones quietly go elsewhere. Such a shame.

@Techguy1138:

You misunderstand.

There is no gap of NOTHING in between. Tempe/Scottsdale/Phoenix are not, for practical purposes, separate cities. The sort of municipal elitism you're displaying comes off as kind of pathetic.