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Fortune: LA Price Drop Will Be Significant

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Studying voodoo factors like price-to-rent ratios, Fortune recently published a lengthy, authoritative-sounding article predicting where homes prices are headed. If elite cities like Los Angeles, New York and Chicago usually fare OK in the long run given that people will pay a premium to live in those glittering urban pockets, Los Angeles, which Fortune predicts will see a 24 percent drop in prices, is one of those cities that is more screwed than others. (Handy comparison chart here.) Why? In part because prices rose faster here than in places like Chicago and San Francisco. A statistic: "Annual housing expenses, after factoring in all tax savings, now absorb 34% of the average family's income in Los Angeles, twice the figure in 2000." Worse off than Los Angeles, of course, are our outlaying "boom towns," the sprawling suburbs that saw an algae bloom of over-construction.
· Real estate: Buy, sell, or hold? [Fortune]