Originally Posted by gamelan
this site has me freaked out though, http://www.housingbubblebust.com/
my background. i'm looking to purchase a home probably in the 1000-1500 sq ft range in either the Pasadena or Long Beach area. Silver Lake would also be nice but it's a little too pricey for what i want. the ideal home would be a pre-WWII era Craftsman.
First off, if you really want an RE site to freak out you, http://patrick.net/housing/crash.html
is even better.
If I was you, I would rent in LA for the next two years, especially if you are thinking Silver Lake.
I lived there for 7 years and saw houses go from 125K to 980K in three years time. While it is nice, S'Lake's infrastructure (streets need repaving, the power always goes out with wind rain, etc) isn't up to snuff. Also, if you look closely, it's really dirty, the the LAUSD stinks and there is a rampant gang problem in S'Lake/Echo Park/Rampart district.
Also, historically speaking, the Eastside doesn't hold its value as well in a downturn. During the last boom/bust cycle, houses in Los Feliz lost 35-50% of their value and my idea of 1200 sq-ft in an 1920s house for 800K+ isn't a prudent investment.
Have you thought of Altadena, more room, cuter houses in the style you want and the prices have come down more in line with fundamentals.