How low can this go?

The local real estate market has shown a significant decline, with L.A. home prices falling 9.7 percent since January 2007, and the median price dropping below the benchmark of $500,000. So the Business Journal asks:

How much further do you think prices will fall?

Linda Treichler

Vice President, Business Banking Officer

Affinity Bank

I think they're still going to fall--I think they might fall about 5 percent more until the end of the year, when they may stabilize. A lot of the media attention is focusing on the bad loans, and when those issues get resolved, those issues may go on the backburner and stabilize that market.

David Offenberg

Professor of Finance

Loyola Marymount University

The best measure we have of home prices is the S&P/Case-Shiller Los Angeles Home Price Index. Investors place bets on the future level of the index with exchange-traded index futures. The most recent futures prices suggest that home prices will fall by 16.6 percent to 18.3 percent from November 2007 to November 2008. A projection of a 25 percent total decrease in home prices, from today until the bottom of the market, would be a conservative estimate.

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Todd Shillingten

National Sales Director

AmeriFund

I think we have room for prices to drop but we are waiting to see what the stimulus package does to the housing market. We have a ways to go before housing prices stabilize. Currently interest rates are going up--even though we've had the Fed cut rates. That's due to the fact that there is no secondary market for jumbo loans. Once the increase in loan limits jumps, we should experience a change in the jumbo market. That should provide a stabilizing factor for home prices.

Vicky Gancayco

General Manager

Arpin International Group

Psychological factors cannot be ignored: Continued reports about a weak real estate market get into the psyche of homebuyers. They will continue to bring in lower offers and sellers will yield to the pressure of the less-than-robust market.

Tony Wang

Associate

HGA Architects and Engineers

I believe home prices will drop another 10 percent from current prices, over the next year or so. It's becoming more and more difficult for first-time buyers to get a mortgage from the bank. Many potential buyers will be anxious about entering the market until it levels out in 2009.

Business Journal Poll

L.A. home prices fell 9.7 percent from January
2007 to January 2008. How much lower do you
think they will go?

This is the bottom         15%
Up to 20 percent more      49%
Deeper than 20 percent     36%

Online results for week ending Feb. 19