Monday, January 12, 2009

Low End Housing Gets Hammered in a Recession

Lansner on Real Estate reports the low-end Los Angeles / Orange County home price loss is nearly twice the high end:


I’ve posted before on why low end multifamily underperforms in a recession, and I think the same logic holds for single family values. I think this is also consistent with my argument that part of the reason some markets bubbled more than others is the markets had a high percentage of rental single family housing (discussed here). My conjecture is probably much of the low end houses trading now were probably originally rentals that were sold to owners, were foreclosed on, and are now shifting back to rental stock at prices that can be supported by rents.