Be Careful What You Wish For

Remember that blog post I wrote a while back? On January 24, 2007, to be exact. It went something like, "Houses in LA are so expensive. I mean really expensive! Seriously, what's going on? How am I supposed to buy a house in LA when it's so expensive? I wish houses weren't so f-in expensive." Sound familiar? Scroll down if you need to refresh your memory... or read it for the first time.

Over a year later, I got my wish. In March of this year the LA Times reported that house prices in LA dropped 26% from a year ago, bringing the median house price to $409,240. "On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% (Viles)

So translation: houses are no longer so expensive! I can even entertain the idea of jumping in the market. This is good news until you start to think about what had to happen to get to this point. You don't even have to think about it. It's on the news everyday: Zero percent interest rates, soaring house prices, greed all around, then reality kicks in. People's mortgage payments jump, they can't keep up, they default on their mortgage and the market is flooded with foreclosed houses. The law of supply and demand makes its appearance and house prices go back down.

So yeah, houses in LA are more affordable but at the expense of thousands of severely cash strapped homeowners.