… And Boy Are My Arms Tired

I just flew back from the East coast where I spent the week in training for a new job - to be known here as “the day job” unrelated to real estate - which explains my absence from this blog for a while.

Over dinner with my new boss, talk naturally turned to our lives out of the office, and real estate and Redfin came up.  It turned out that my boss, too, has always been fascinated with the subject and was eager to discuss it (after weather and kids, real estate is about as universal a topic for social ice-breaking as they come).  Since we were in Boston, I pointed out that Redfin serves that market and has bloggers who cover it with as much alacrity as we in L.A. cover ours (in spite of their Celtic-centricity … but - ouch! - that’s a different subject).

Mitch had in fact tried clicking through on Redfin.com but was discouraged from proceeding because of the recent MLS-dictated requirement to register.  I assured him it was worth the trouble, and that he wouldn’t be spammed if he did.

We swapped our personal real estate stories – both with bottom-line happy endings – and then he asked me the inevitable question:  “Is now the time to buy?”

My reflexive response:  “No, not even close.”  Mitch seemed surprised. 

I explained that, first of all, I was characterizing the Los Angeles market and that Boston may well be a different beast; he should register on Redfin and read read the Boston blog to decipher the market there.  But in L.A. affordability is still an insurmountable hurdle for the great majority of potential buyers, close to the worst in the nation.  I told him that I thought we could expect at least another two years of declining prices before a long, long period of stagnation.

Yes, prices have plunged here.  But that’s no indicator that they’re stable now.  As Warren Buffett might say, return to the fundamentals.  Looking at basics like the ratios of income to prices and rents to prices, there must be a long way to go.

The comforting, deeply embedded illusion that real estate always goes up, or at least never goes down, has been shattered, and is in the process of being ground into powder.  A casual glance at current headlines – this from the U.K -still has the power to stun:  “Traders predict house prices will fall by 50% in four years” .  Of course the U.K. is a different market, but not so long ago that kind of headline would have been as unthinkable there as it used to be here.

Now that I’m back from Boston there’s one more thing that needs to be said:  Go Lakers!