Pasadena Real Estate - 3rd Quarter Sales Report

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Business Week’s cover story for the issue dated Oct. 15 is worth checking out -- headline: ‘Housing: That Sinking Feeling.’ The story details sudden and deep price cuts by homebuilders -- a relatively small portion of the overall housing market -- and predicts those price cuts will put pressure on sellers of existing homes in the broader market to drop their prices accordingly:

‘It’s unfortunately a necessary part of the process,’ says Richard J. DeKaser, chief economist for Cleveland lender National City Corp. ‘’Once you see developers acting as aggressively as they are, the rest of the housing market is not too far behind.’ ... The resale market will eventually have to realign --meaning homeowners will have to cut their prices -- before the slump can end.’

Our take: We find this an interesting, and little-understood, part of the housing story. Remember that foreclosures closely track recent building -- in California, foreclosures are highest in places where recent home-building was most aggressive. And Los Angeles -- by far California’s biggest housing market -- was not a hotbed of building, and so far has not suffered the brunt of the foreclosure wave that is hitting the Inland Empire and the Central Valley. (L.A. does not rank in the top 20 California counties in most foreclosures per capita). So we pose it as a question: Will Los Angeles continue to dodge the foreclosure wave? Will it be the ‘last market standing’ because its scarcity of undeveloped land has limited new building? Or, conversely, will Los Angeles ultimately be hit just as hard because of its unaffordability, and the razor-thin budgets of recent homebuyers here?

We anticipate your thoughts and comments on this. E-mail story tips to lalandblog@yahoo.com
Hat tip: Amir