This is the most frustrating part! The collapse of the market WILL take the economy down with it as a whole. It doesn’t take an Econ expert (which I certainly am not one) to see that a majority of our economy has been supported by RE and its related industries for the span of this bubble. The government sees this - hence this bail out. All this other talk is PC BS.

The problem is it is absolutely delaying the inevitable. The market NEEDS to correct itself. How long is it feasible for the median house price in LA to be 10 times the median income? And have you actually looked at a median house? When you consider most of the RHoG are below, factor in the celebrity estates and even the upper middle-class McMansions, a median priced home in a decent neighborhood is a 2 bd, 1 bth “sprawling” 900 plus square foot beautifully maintained thing of joy. And as all of you know, beautifully maintained is RE code for never been updated, still has floor heaters, window air conditioners, original electrical and plumbing, and the roof is probably older than you are.

YAY for median - not.

http://www.dqnews.com/ZIPCAR.shtm

For newbies who aren’t used to looking at the data, please remember these are MEDIAN prices, i.e. the price represented by the middle value reported in the list. It is NOT an average, or a weighted average.

In some cities, you’ll see few sales reported: these figures are highly unreliable, and largely invalid. For example, look at Somis, in Ventura Co: it shows a 255% increase in median! On the other hand, Landers shows a 55% drop.

However, notice these figures are derived from the sale of two homes, so remember to look at trends in large cities with more sales (e.g. Oxnard, Ventura, Port Hueneme, etc; all are down, some dropping significantly).

IMO, there’s still LOTS of fat to chew off these prices, and just wait until the sub-prime/Alt-A meltdown starts to hit.

HOWEVER, the thing to remember is credit tightening will prevent buyers from buying what they cannot afford (which is a GOOD thing); this restriction effects 1st-time entry-level buyers, as well as inept specuvestors and would-be flippers (ALA Casey Serin), but NOT the move-up buyer who’s already in their home with a good FICO (e.g. someone who has to relocate for work, etc).

Therefore, don’t be surprised if/when the median figure actually INCREASES in the next few months (with total sales VOLUME continuing to decrease), as the market will pull back from 1st-time buyers, leaving only traces of existing owners who are buying.

When this happens, don’t be fooled: no doubt, the REIC will use this to announce, “see, we told you. You losers who sat on the sidelines should’ve bought earlier, as prices are STILL going up with or without you!” This is nonsense, as numbers WILL fall in the long-run, especially if most people will forget to look at sales VOLUME and figure this out. Frankly, I think many intelligent buyers WILL overlook this factor…

Already, some of these areas are showing $100k off the median Y-2-Y, so that’s a great start to the bust (and CA is in for a BIG-TIME correction)….

We all know how smart cheerleaders are.