Based on the daily Notices of Defaults (NOD) and Trustee Sales (TS) I see for east Los Angeles County on a daily basis, for desirable places like Arcadia, San Marino, and Pasadena, only about 10% of the people w/NODs end up with a notice of TS, and only about 10% or less of the homes in TS actually goes back to the bank. Given the fact that prices are still in stratosphere in Arcadia, I don’t think the default/foreclosure pressure has quite affected the Arcadia market as much as places like El Monte or La Puente, or even W. Covina-yet. When do you think the market pressures will get to the sellers in Arcadia? like I stated in my last post, properties listed below $300 per sq. ft.are still being snatched up quickly in this area.

Glad to have you as a reader!

I agree that cities like Arcadia and South Pasadena will always command a premium when it comes to real estate prices. In addition to the wealthy immigrants, we have good schools, many amenities and even high traffic entertainment hubs (i.e. Santa Anita Mall, Old Town & the Race Track).

Although that’s the case, the premium for Arcadia housing is still relative to its neighboring cities. Pre-bubble, a $500k condo here might cost you only $250-350k in a less desirable area. The problem we see is that the same property is currently listing upwards to $750k in Arcadia!

As you said, demand is still there for housing and I fully expect buyers to jump into the market as prices decline. How much of a decline before this happens has yet to be seen.

Great blog, I have your paged saved on my mobile phone, and look forward to reading new postings every morning.

I think it’ll take some more economic downturn for prices to really come down. For example, this property you listed not long ago:

1233 S. 6th Ave. Arcadia, CA

This was a foreclosure piece. No one went to the foreclosure auction but as soon as the property came on the market, it was taken, probably at a pretty high price too.

I fully agree w/you that prices are way to high, based on income or rent. But I think there are many buyers out there who made $ during the boom and are waiting to enter the market. Places like Arcadia is highly desirable for certain niche groups, such as Chinese immigrants, and thus demand will remain high. As long as demand is high, I think prices in Arcadia will remain high for a long time absence some drastic economic downturn.

The mess could have been much worse. Most interest only loans resets are based on the 1 year LIBOR rate plus a margin of 2.25%. The European Central Bank pumped $500 billion in US dollars to their economy back in December 2007. Since then the 1 year LIBOR rate has dramatically fallen and any rate resets were at the same rate, but only good for 1 year and with principal added. Next year now, unless the world banks want to keep pumping money in the economy and risk runaway inflation (which itself is worse, high food and gas prices), the housing crash will really take a hit.

http://news.yahoo.com/s/ap/20080429/…_out_the_attic

missedthebubble …I agree that this is where we need to be in order to get in balance with the now tighter lending standards (which by the way, were normal just a mere 10 years ago when I bought my first house…!!!)

I don’t think you are a nut job…but we also have to keep in mind that altho median prices may drop to 3xmedian income, people need to remember that when we are talking “median”, there are always those areas that are well above that median…ie, Pasadena vs. Canoga Park. It’s all relative…back when you could get a fabulous architectural home in Madison Hts for about $200,000, the ave median house in Canoga Park was about $50,000.

We have a record # of foreclosures, and are record # of impending # of foreclosures.

We have a record # in the increase of vacancies

We have the highest prices in Oil and Gas ever.

We have the largest increase in the price of food ever.

Lending standards will be the tightest they have been in 30 plus years, in an era of a negative savings rate.

The state of California is the 3rd most unemployed state, and the rate is going up the fastest of any other state.

You may point to my comments and say I am some nut job with a severe negative attitude, and you may be right. However, in my defense, we have never seen the scale and magnitude of this economic disaster. You may even try to dispute some of my claims, great.

In the end it comes down to supply and demand. The record # of foreclosures is creating a massive supply of homes for sale, the tighter lending standards is limiting demand. Combine that with gas and food inflation and a shaky job market, and this pretty much insures that prices are going down.

I figure 3x median income….

Great site! I will make sure to save this link for future reference.

Now if you were to get out of the San Gabriel Valley area and move East into the Inland Empire, it’s no exaggeration when I say it’s a bloodbath over there in terms of foreclosures and price corrections.