The Collected Works of Author and Blogger Larry Roberts

Archive for 2010

There is a simple truth about the housing market; people are going to buy and sell homes when is suits their life's circumstances. Unlike many of the readers of this blog, few base their decisions on market dynamics, and even when they do, each sets their own risk parameters. The main factor separating those who benefited from the housing bubble from those who did not was a Simple Twist of Fate; for some it was time to sell or buy, and Fate either enriched or destroyed them. I have often wondered if I had made different decisions during the bubble if I would have been caught up in the frenzy. Although I don't believe I could have fully ingested kool…[READ MORE]

Housing bubbles are catastrophes. Like the Hindenburg or the Titanic, house prices had an aura of invincibility that came crashing down and sunk to an (under)watery grave. If a mortgage product were to inflate a housing bubble, the pump and hose that primes the first stages are adjustable rate mortgages. These risky products give the market ability to weather interest rate shocks, but they also provide the air that inflates prices 10% to 15% above stable prices set by using fixed-rate mortgages. Californians pay too much for their houses because many get trapped into adjustable-rate mortgages to borrow as much as possible. It becomes a rite-of-passage that your first purchase requires you to take on a risky loan and stretch…[READ MORE]

Recap of Past Predictions First, I wrote Predictions for 2008, and last year I wrote Predictions for 2009. Nothing too bold or surprising either time: "Most of the macroeconomic conditions I made in 2008 are still operative, and several of the predictions I made which came true will likely repeat in 2009. These are: 2008 will see the worst single-year decline in the median house price ever recorded One or more of our major financial institutions and one or more of our major homebuilders will fail A severe local recession I predict we will see many more angry homedebtor’s troll the blog I do not believe 2009 will see median house prices decline as much as 2008, but I do…[READ MORE]

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