L. A. Times: "Relax"

According to a July 23 L.A. Times story by Diane Wedner, the "experts" assure us that the tumbling prices, bloated inventory, and 8 to 10% interest rates we experienced in the early 1990's are "nowhere in sight" and that buyers and sellers can relax since we now have a "more normal market". The area's economy is "strong" and "diverse". So this time it's different.

DataQuick expects the median price in Los Angeles to rise 6 to 7% from the median 2005 price of $460,000 (umm, we've surpassed that). The worst-case scenario, which is "not expected", is that prices decline at most 7%. Maybe just a few clouds marring that blue sky smiling at us.

San Diego "is different" due to overbuilding of condos in downtown. While San Diego new home sales have dropped, Los Angeles and Orange County new home sales, including condo conversions, have "soared", due to "pent up demand from years of under-construction". (Does not compute - sales of existing homes are significantly down, so I guess buyer demand is focused like a laser beam only on new homes.) Builders in the area are only building if they can "pre-sell" the home, thus limiting construction to prevent market saturation.

200,000 to 300,000 new residents end up in Los Angeles County each year, and the stock market hasn't been doing great, so the only place "expected" for investment dollars is real estate. Sounds like real estate is a can't lose, sure-thing investment. (Only a moron would want an easy 5% plus in short term Treasuries.)

The 13% overall sales decline is just a drop to a more normal pace, the experts assure us. Half the home listings are by sellers "fishing" for top dollar for their homes, and when they don't get it, they pull their homes off the market. So don't worry about any rising inventories; those inventories are "falsely" inflated. (I am not making this up!)

Interest rates are still "reasonable" (true), but buyers won't start resisting until interest rates hit 7.8%. No reason offered for that particular level.

So stop worrying. Relax. Realtors "love" this market, where sellers are "more reasonable", buyers are "getting in" the market, and the "flip artists are gone. Everybody wins."