Vol. 14, No. 3,353 - The American Reporter - February 6, 2008

Second Take

by Walter Moore
American Reopiorter Correspondent
Los Angeles, Calif.

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LOS ANGELES, Jan. 23, 2006 -- In an article on the price of houses yesterday, the Los Angeles Times reported that "Southland prices rose 16.5 percent over 2004 to a record median of $460,000." That's only true as far as it goes.

Monthly figures tell a different story the Times story doesn't mention: prices basically haven't risen since August 2005. The median price of a house in Los Angeles County did not change at all from August to September. In October, the median price went down one percent; in November, up one percent; and in December, back down one percent. So prices are not rising right now. They're flat, and have been since August. Why couldn't the Times tell us that?

In some neighborhoods, moreover, prices have dropped significantly. In Westchester, for example, the average price of homes sold dropped nearly 4 percent, or $31,000 per house, from November to December.

So before you let any politicians use the banner of "affordable housing" to sell you on new taxes, or on subsidies for developers, take what they say with a grain of salt.

Prices have risen dramatically during the past five years, but there's an Economics 101 explanation for it:

  • Lower interest rates have enabled people to buy more expensive houses with a given monthly payment;
  • the "adjustment" in the stock market in 2000 drove a lot of investment money into to real estate;
  • the massive population growth in our city - much of it due to illegal immigration - has driven up the demand for housing; and
  • rent control drives up the price of non-rent-controlled units so high that people can buy a home for less than they can rent one.

Stay tuned to see what happens with "affordable housing" in coming months.

Walter Moore is former Republican candidate for Mayor of Los Angeles.

Copyright 2008 Joe Shea The American Reporter. All Rights Reserved.

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