Los Angeles Tumbling, But Still Unaffordable Real Estate

Los Angeles Real Estate prices are in a decline. Not as steeply as the rest of California but the trend is about a 5% annual drop in value. Many first time buyers that I know and am prequalifying are excited about this, but then they run the numbers on a $450000 mortgage instead of a $600000 mortgage and see it is still not makeable. Los Angeles Real Estate has always, is always, and will always continue to be very very expensive even in recessionary market conditions. A buyer emailed me today complaining about $300000 shacks in the middle of the ghetto and how they'll never be worth as much as they were last year. I disagreed with him. The reason being, inevitably all the ghetto areas become gentrified. Even if it's 40 years away literally everything in between the 10, 5 and ocean will made nice and just the land be worth millions. Look at Manhattan, London, Hong Kong price trends and density since 1960. Dr. Schumacher says in his book-"if you think real estate is expensive now, just wait until 10 years from now." And that is true when you look at real estate over the long haul. Especially in Southern California. Brian Tracy says in his book that real estate increases in value at twice the pace of population growth and three times the value of inflation and also decreases at the same amount. L.A. certainly has population growth and inflation isin't going anywhere. The net result that I've seen is about a 40-50% reduction in buyers because they were doing 95-100% financing and willing to pay $4000 a month in mortgage bills. Now I am seeing smart people with good credit and down payments getting good prices because they're the only ones able to buy. The mortgage liquidity crisis has not improved at all, but less attention is being paid to it in the media for some reason. I find this perplexing but inevitable with people's short attention spans and bury-their-head-in-the-sand mentalities. I would argue that those were the only people who should be buying houses anyway. Since when can you buy a house anytime through history with no down payment? Even with a substantial down payment-a $400000 mortgage costs a ton of money when you factor in taxes, insurance, maintence, city assessments etc. Rich Dad said "A house is an asset-it's just not your asset" and he's absolutely right.
We can whine and complain all we want but the truth is, there will always be people willing and able to pay top dollar to live in California. I am choosing to see the opportunities in the current downturn instead of the brutal reality of the cost of this market.