From the Los Angeles Times:
Los Angeles economist Christopher Thornberg believes that home prices will stabilize when homes are affordable to about 25% of the adult population. For that to happen in Southern California, home prices would have to come down 20% to 35% from their current levels, Thornberg said.
“There’s no way in hell the house you buy now will be more expensive next year,” he said.
Home prices are also relatively high compared with rents. The ratio of home prices to annual rents in the Los Angeles area was 20 as of March 31, meaning the median home sale price was 20 times a year’s rent for a comparable property, according to Moody’s Economy.com.
The 15-year average ratio in Los Angeles is 16.4.
As a completely uncontrolled experiment to see if Mr. Thornberg is right: Zillow currently thinks that my home is worth $414K, which I think is…ambitious, to say the least.
Click here to see the recent price history; does that look like a bottom to you?
We’ll check back in a year.
Read the Full Story in the Los Angeles Times:
“Should you buy a home now?”
August 3, 2008