Wednesday, August 29, 2007

Over-valued real estate #11 - Los Angeles




The real estate market in Los Angeles is one of the most inflated in America. The housing price index for a single family house currently stands at 289 compared to 100 in the first quarter of 1995. The market is no stranger to bubbles - it had one in the late 1980s. Real estate prices fell throughout the early 1990s, and only recovered their 1989 values in 1999.

How far does today's market have to fall to return to its long run trend level? A massive 48 percent.

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