If L.A. markets didn't exactly bubble, they were certainly in a froth, with prices so high that many people resorted to dangerous loans in order to buy. When these adjustable rate mortgages reset and the economy tanked, many people could no longer afford their payments, sending foreclosures soaring.
This is a huge market, however, and the economy is extremely diverse with a strong manufacturing sector, a major port, a massive entertainment industry and many tech companies. It was never dependent on residential real estate development in the same way as the bubble cities. The unemployment rate, while high at 12.1%, is below the state average of 12.5%.
Home prices have declined nearly 40% from late 2006, but most of that dip hit in 2007 and 2008. Since then, prices have flattened. That's a good thing because continued falling prices would have put significant strain on the many mortgage borrowers who are "underwater," meaning they owe more on their mortgages than their homes are worth. The longer people are in this position, the more likely they are lose their homes to foreclosure.