Friday, June 27, 2008

A Wile-E moment

The Dow plummeted 358 yesterday and another 107 today. The market seems to have had a Wile-E moment. The LA Times front page this morning sounded a lot like bubble blogger predictions of the last couple of years (titles from paper version):

Dow's drop reflects extent of U.S. economic troubles

It could be a long wait for things to get better, with little help from consumers or the Fed.

The bruising decline followed a recent barrage of bad economic news that added to concerns that many Americans -- deep in debt and having trouble borrowing more money from banks already reeling from loan losses -- could be forced to rein in their spending for years to come.

The current sell-off has erased the belief that the market hit bottom after the startling eleventh-hour rescue of collapsing investment bank Bear Stearns Cos. in March.

The market failed to realize, she said, that the economy's weakness is "going to be a long and drawn-out affair."

This is the other shoe I've expected to finally bring down Westside real estate prices. The combination of speculative bubble and local aerospace recession did it in the early 1990s. The current huge bubble plus wider recession with reduced incomes, asset values, and ability to borrow has to impact even so-far stable areas.

However, it doesn't mean you'll necessarily then be able to buy your dream house. Suppose your current income and assets could buy a $1M house, but your dream costs $1.5M. A big recession cuts that price to $1M. Finally!? Maybe not, if your income, assets, or loan availability also fell. Got cash?


Anonymous said...

Oh please! None of this will have any effect whatsoever on RE prices in desirable westside ZIP codes. It's the damn liberal media stirring things up!

I find that closing my eyes, plugging my ears, and chanting "jealous bitter renters can't afford to buy in 90402" over and over helps a lot!

Anonymous said...

I agree completely, and this is going to wreck housing prices everywhere (except Santa Monica though and the immune 90402). But everywhere else is going to get hit hard.

Anonymous said...

I still like my money tied up in real estate rather than the stock market...but its scary out there....

hold me Westside!

Anonymous said...

good luck todays update on the new listings..up! time for the law of supply and demand combined with crashing credit. You Real Estate sales folks should go treat your FOR SALE signs for dry rot and temites.

Anonymous said...

Check out the bad real estate news in London. Prices there make 90402 look like Compton.

But it is crashing big time in London and elsewhere in Britain.

But I agree, there is ONE postal code in the ENTIRE world that will be immune from all of this calamity. Even though the prices in 90402 skyrocketed just like the prices in Lancaster, there is absolutely no reason in the world why they should fall one penny since the skyrocketing prices were justified by the market!

Anonymous said...

Ticker: QID

Anonymous said...

Can an HOA force a renter to pay delinquent HOA dues during foreclosure?

I know this is off topic but I thought that the readers would find it pretty funny. I leased a 2br 2b condo in June 2007( 90403). Our landlord came to us in January 2008 and said that he didn't really own the condo any more because it was in foreclosure. It has been in ownership limbo for 6 months. We stopped paying rent and have been living for free since January. The HOA in our building put a letter on our door requesting that we start paying the HOA dues or they would put a lienon our property. If there is anyone who could provide some advice I would appreciate it.

How often are squatters threatened with liens?

Anonymous said...

"The HOA in our building put a letter on our door requesting that we start paying the HOA dues or they would put a lienon our property."

Now *that's* funny! Seems like the HOA doesn't realize:

A-the unit is leased
B-the unit is in FC

LOL!! Hope you're ready to move quickly though! :-)

sexy said...