LA Housing Market is Collapsing

In more news that the housing market is starting to crack across the U.S., Jason Calacanis that the Los Angeles housing market has reached the tipping point. His thoughts :

The "fake markup" in houses right now is becoming a running joke at this point for us. You walk into a home and you immediately take 10-15% off the asking price because the selling agent tells you immediately that there is "room." Room is ~10% overpriced. If the broker tells you "bring any offer," "there's a lot of room," or "make an offer, who knows" that means the home is overpriced 15-20%.

Clearly from the title of this post I think we just had a tipping point caused by the fact that buyers believe that the market is going to correct 5% a year for the next two to three years--something they keep saying in the press over and over again. To get there folks off the sidelines you need to go 10-15% below the 15% "fake markup," or 25-30% of the asking price right now.

Ouch! 25-30% of the current asking price? Are things really that bad? Seems so.

But this isn't really surprising. LA has been a hot market for some time, and the hottest markets have the most room to fall as housing prices drop.

For more thoughts on the housing situation, see these posts:

• What I Think Will Happen to the Housing Market

• Homeowners Becoming Desperate to Sell -- Start Burying St. Joseph Statues All Over to Sell Homes

• My Real Estate Investing Plan for the Housing Decline

• More Signs the Housing Market is Headed Down

Comments

[ChrisCPA]

I agree with your comment.

Things don't seem to be that dire in the midwest. A friend of mine just bought a house last week & was excited to get $8k lower than the asking price.

It seems to me that areas that are seeing the biggest "crunch" are the ones that saw the largest price increases in prior years.

[J Martin]

Everything else out there is fake, so why not housing prices?

[HENRY!]

I hope real estate is still falling when I buy a house next year.

[Adam]

I'm in the same boat as Henry, hoping to buy in the next year or so. Around here though, the Blue Ridge mountains attracting a seemingly never ending supply of incoming wealthy retirees seem to keep the housing market going very well.

[Rhea]

I am in Boston, one of the super-inflated markets in the US, like LA. Owners have to pull home prices out of the air right now because no one knows what will make buyers buy. It's a standoff. I couldn't be happier. I want to buy in 1-2 years, when things have come back down to reality.