That might not be true. In Australia we've only really just started the housing dump. But it's started hardest at the high end of town here on the Gold Coast. Waterfront and Beachfront in particular have taken a hammering as the wealthy see their share portfolio's halved and margin come a calling. Also a lot of businesses (which were financing those houses) are now feeling the strain. I suspect that the real answer is that different sectors get hit to different extents at different times.
I am seeing the high end crack - loans are very hard to get and cash buyers are negotiating smoking deals. You have to look deeper than closed sales. (those are the truly desirable properties... the question is can people even sell the less the perfect properties for millions of dollars) The answer frequently is - no chance.
I still contend that these uber-wealthy enclaves that had been holding up would start to crumble once the stock market really began to slide. It wasn't that long ago that the SPX was trading at 1300. And what percentage of these folks with $10MM+ net worths are probably stuck in hedge funds with halted redemptions as well.
I would think the same also. The flip side though in many urban areas is replacement options. Let's say you sell a home in Sherman Oaks for 1 million. Now what? That 1 mil returns 10-30k a year in Treasuries while the rent on a comparable home in L.A. would be at least 5k a month. Hence for the resale market in high rent cities to implode the variables must change. Either rates need to go higher-not just mortgage rates but Treasury rates-and unemployment must inch up high enough to force down rents. I know that all three metro areas I follow closest-Chicago, SoFla and L.A.-all have ridiculous amounts of high end multi-family housing coming on the market. In L.A. it's been common to see developers convert under subscribed condos into rentals. That certainly SHOULD cap the L.A. rental market and as rentals auction lower the E in the resale p/e equation becomes taxed by over supply.
the scariest part about that chart is the acceleration in the x-axis. if it were spaced equally throughout, the "parabola" should be close to a near-vertical line.
The mistake that one might make is considering the LA market as a monolith. The supply of anything and its rental value is going to be much different in Belmont Shores or Studio City or Sylmar. IMO...Trying to project a Cap on the rental market there is folly...unless you narrow it down a specific neighborhood. Much like any other major metropolis in any other part of the country. However those sellers that still value the "E" in their proprieties are not the ones you want want to deal with.
Doc it's getting to a point where those miles of wasteland each side of the Miracle Mile on Wilshire have one new development after another, Hollywood is getting rapidly filled in-most of those hooker filled parking lots are gone-Weho teardowns, downtown insanity, Americana in Glendale, a 200 unit rental opened in Westwood last week, ect. In most all of these developments rents start north of $2500 a month. Obviously you're right, Sylmar etal aren't on the developer radar BUT there's big shit being planned in NOHO and Panorama City so Sylmar might be next!
Thats what those fools get for buying a house for 2x what it was worth. Housing prices are not nearly as low as they ought to be. But the next year or so will put that in order damn quick. You wanna sell houses? Drop the prices. Can't avoid the pain im afraid.