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.

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16 thoughts on “Should you buy a home…now?”

  1. 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.

  2. 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.

  3. 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.

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