Sorting through recovery predictions

There's been a ton of predictions flying around lately (aren't there always?) about when the housing market will recover.

I'm going to sort through a few of them and offer my thoughts.

• First, the excellently researched doomsday blog, Dr. Housing Bubble, predicts we won't see a bottom in California until 2011. And in this post he gives 10 good reasons why this could be true.
• Second, Robert Shiller says housing prices in the U.S. could eventually fall more than they did in the Great Depression.
• Credit Suisse sees the bottom at least more than a year away.
• CNBC's Jim Cramer -- who was calling for the Fannie/Freddie bailout, recomends a fed rate cut, and says housing stocks have already bottomed -- sees the housing market bottom coming in the 3rd Quarter of 2009.

But what does this mean for Los Angeles? Well, what it does not mean is that homes are going to become considerably more affordable to many more people in Santa Monica. Or Malibu. Or Westwood. Or Beverly Hills. Or Brentwood.

I'm sorry, but no matter which of these wannabe sages is correct, it does not mean we are going to see tremendous affordability coming to these most desirable areas of Los Angeles.

Not. Gonna. Happen.

Waves of foreclosures have already hit Southern California. But not these areas. Are they still coming? I don't think so.

I don't think so when we have already seen prices drop enough that buyers have started coming off the sidelines.

I don't think so when the feds are stepping in to move toward a solution in the mortgage industry.

I don't think so when there are still so many people that want to live in these areas.

The likelihood of foreclosures hitting in waves in Westside Los Angeles has actually diminished in the last few months. And the direction things are going doesn't point to dramatic price declines in these areas.

More likely, we will see stagnant or slightly dropping prices over the end of this year and early part of next year. But I think we are likely to see an improved market in the summer of 2009 vs. the summer of 2008 for these prime areas. That means more sales. Fewer dramatic price drops.

And while the beginning of a recovery will likely come to these prime areas next year. Lesser areas of Los Angeles, probably won't experience this until 2010, or maybe even 2011 or later, especially in places like Riverside County.

So while these pundits may be correct that a real estate recovery for the nation or less desirable areas of California, could still be years off, it's just around the corner in Santa Monica. Or Malibu. Or Westwood. Or Beverly Hills. Or Brentwood.