Sunday Morning: Has The Bubble Really Popped? It Doesn’t Look That Way in LA

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Good Morning. Writing for the LATimes opinion section today, Slate’s Daniel Gross declares, ‘The (housing) bubble has clearly popped.’ He goes on to argue that speculative bubbles are good things: they lead to innovations that are good for most of us (granite countertops?).

That was a joke. The innovations he’s talking about are new financial products that give Americans more borrowing options (New Option: Buy a house without ever paying for it). The larger issue here, for LA Land anyway, is his premise that the bubble has popped. I’m not seeing it -- not in Los Angeles, anyway.

Check out Myron Levin’s account of yesterdays’ auction of 92 foreclosed homes at the LA Convention Center. Remember, these are houses that nobody wanted -- that’s why they’re being auctioned -- and prices held up.

‘Winning bids typically were within 10% to 20% of the previous sale or appraisal price ... The brisk bidding highlighted a paradoxical feature of the real estate market in the Los Angeles area. Sales volume has declined steeply as houses languish on the market, but without a corresponding drop in prices.

‘We’re having a correction,’ said Bob Friedman of REDC, which ran the auction. ‘It’s not going to be a major league correction…. People are getting a discount today, but probably not a huge discount.’

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Photo Credit: LATimes.com