Those that are expecting a quick turn around from this bubble are dreaming. The last cycle took about 11 years to reach peaking pricing from the previous peak. Here are your Los Angeles County vanilla medians between 1989 and 2000: http://www.laalmanac.com/economy/ec37.htm
Pretty amazing, someone who purchased the â€œmedian homeâ€ for 214,831 sold for 215,900 11 years later. However, this bubble appears even larger that the 1989 run up as depicted in the following graph: http://latimesblogs.latimes.com/laland/2008/04/where-we-stand.html . However, prices are falling faster, so perhaps we can reach a bottom faster.
In my opinion this would generally be a terrible time to â€œinvestâ€ in real estate, unless you must buy now (because of a 1031 exchange, for example). All leading indicators are pointing in the same direction as to the Los Angeles market, (i) inventory has increased, (ii) sales transaction volume has slowed dramatically, (iii) lending standards have tightened (pulling thousands of potential buyers from the market), (iv) notices of defaults and foreclosures are at records levels, (v) the economy is slowing (looking more and more like a recession) and (vi) literally thousands of high paying mortgage and other real estate related jobs have been lost in southern California over the past year. All of these things will put downward pressure on pricing for some time to come.
The reality is that prices will almost certainly be lower later this year, likely lower in 2009 and possibly even lower in 2010. Real estate cycles take many years to play out and we are at the early stages of a down cycle.
Best of Luck,
We spend a lot of time crawling through the numbers and you're going to find better leading indicator data in inventory levels, days on market and lots of other stats. The Case Shiller will be 6 months behind these other stats. Plus the CSI is regional and your local market may have nothing to do at all with the whole LA region. A good realtor will not only tell you those specifics about the local market, but they'll also be able to illustrate it. Anyway, if you want to look at stats for Long Beach in particular, our free research page is below.
Like politics, real estate is local. In the Tampa market, there are plenty of foreclosure, short sale and other distressed property deals to be found, but the prices on arm's length, market condition homes have not fallen nearly as much as CS indicates. In fact, the last couple of months we've actually seen increased sales. It's still too early to call it a trend, but the foreclosure rate is down, sales have increased, inventory is leveling. We may not have hit absolute bottom yet but there is NO data to support that we will a free fall as CS has predicted.
Also keep in mind that CS is used primarily by securities investors buying hedge funds against house prices. The worse the report makes it sound, the more scared people become....and the more money Shiller makes.
My buyer pipeline is over 1500 strong so I have a decent sized sampling of the Long Beach market.