Should you buy a home…now?

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

No.

Comments

  1. Tom Chappell wrote:

    September 1, 2008: $406,000.

  2. Tom Chappell wrote:

    October 1, 2008: $393,000.

    That’s a drop of $21,000, 5% or so, in about two months, and $13,000 over the last month. No bottom yet!

    Ooh, and on September 23, Dr. Housing Bubble reported that DataQuick had the median California Housing price at $301K; that’s actually lower than my $303K call, so I guess the housing fiasco is over! Good news!

    Oh, wait…my $303K call was for Southern California prices. Carry on falling, then.

  3. Tom Chappell wrote:

    November 1, 2008: $394,000, an actual (estimated) rise of $1,000 so far this month.

    I will never believe that this is the bottom — not even close. We’ve got at least another 10% to go, from this point, probably more like 20% or 25%.

    In other news, I see that Zillow has announced plans to slash its workforce by 25%.

  4. Tom Chappell wrote:

    December 1, 2008: $388,000.

    A loss of $26K in less than 4 months. No bottom yet!

  5. Tom Chappell wrote:

    January 1, 2009: $387,500.

    Slowing down, perhaps, but the bottom’s still a long way’s off, as the many Option ARM loans issued at the end of the boom all start to max out and enter their mandatory conventional payoff phase.

  6. Tom Chappell wrote:

    January 30, 2009: $377,500

    Another big fall this month, and almost $37K since we started keeping track. Woof!

  7. Tom Chappell wrote:

    February 28, 2009: $374,500

    If it can manage to lose another $2,000, it’ll have fallen 10% since my original post.

  8. Tom Chappell wrote:

    March 31, 2009: $375,000

    …a gain of $500 this month.

  9. Tom Chappell wrote:

    May 5, 2009: $368,000

    …another $7,000 set on fire since the last time I checked a little over a month ago, and $48,000 lost since last August.

    “It’s a Cinco de Mayo miracle!”

    Still, at least we’re getting down to more reasonable values. I’m still thinking of $300K or so as a pretty firm floor, barring the Rapture, which would put a fair number of properties on the market.

  10. Tom Chappell wrote:

    June 1, 2009: $365,000

    …another $3K down — that’s less than 1% this month!

  11. Tom Chappell wrote:

    June 28, 2009: $360,000

    …another $5K down this month, and a drop of 13% from when we started tracking this 11 months ago.

  12. Tom Chappell wrote:

    There we go, set a new low of $359.500 after a 21-month hiatus.

  13. Tom Chappell wrote:

    April 1, 2011: $356,000

  14. Tom Chappell wrote:

    May 25, 2001: $327,000

    Kaboom!

  15. Tom Chappell wrote:

    June 24, 2011: $315,500.

    …Oh man, we’re getting scarily close to the $303,000 price that the most crazily-negative pundit, the one who I always thought was exactly right on, predicted so long ago.

    Will we reach it? Will it be the bottom?

  16. Tom Chappell wrote:

    July 13, 2011: $303,600

    …and, we’re there. Some extraordinarily-big moves in the last few months; I wouldn’t be at all surprised to see it keep falling.

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