The Collected Works of Author and Blogger Larry Roberts

Archive for January, 2012

Pending homes sales are rising quickly as 2012 starts. Is this demand based on fundamentals? Is the market strengthening? When the bear rally of 2009 began, I consistently stated the rally would not hold. My reasoning was simple: the housing market was still inflated and the demand was artificial. For the housing market to put in a durable bottom, several factors must be in place: All market props must be removed. The demand must be natural. Prices must be at or below rental parity. Prices must be affordable for a bottom to be durable. Rents must be rising. Rental parity must not be declining for resale prices to be stable. Employment must be rising or stable. Rising unemployment hinders demand.…[READ MORE]

A Brief History of the Housing Bubble From 2003 to 2006, American lenders and borrowers inflated a massive housing bubble. From 2007 to 2012, this bubble has been deflating, but the bottom is proving elusive. The housing market is closer to the bottom than to the top, and if a viable solution can be found to bring supply and demand into balance, the tremendous affordability from low prices and low interest rates will help a bottom form in the near term. The conditions preceding the housing bubble, serve as a baseline to establish a sense of normalcy, a guidepost to stable valuations. When the distortions of value due to the housing bubble are corrected, the preceding conditions will be restored.…[READ MORE]

Last week, I covered the community of Cortona in the Village of Laguna Altura. Before that, I provided an overview of Laguna Altura in the post on Toscana: Laguna Altura is an Irvine Company Village located at the intersection of Highway 133 (Laguna Canyon Road) and Interstate 405. The proximity to the Irvine Spectrum and nearby offices are ideal for local workers who desire a short commute. The ease of access to Interstate 405 and Interstate 5 cuts down the commute time of anyone working at a greater distance. This adjacency to the freeways does make the community a bit noisy despite efforts to buffer the sound. Further, the main entrance is on Laguna Canyon Road, a busy thoroughfare bringing…[READ MORE]

Despite pockets of high pricing, under the presidency of Barack Obama, house ownership affordability on a monthly payment basis has hit an all-time low relative to rents and incomes. This should be cause for celebration. People no longer have to apply an onerous portion of their monthly budget to house payments and related expenses. If this condition persists, the economy will recover quickly from the stimulus of newly freed disposable income. However, rather than celebrating this tremendous achievement, people decry the failure of Obama's policies. This is wrongheaded. High real estate prices are not desirable or beneficial to society. It creates excessive debt burdens which curtails consumer spending except for the brief and unsustainable housing market rallies where people are…[READ MORE]

What is a Mello Roos tax? The Community Facilities District Act (more commonly known as Mello-Roos) was a law enacted by the California State Legislature in 1982. The name Mello-Roos comes from its co-authors, Senator Henry J. Mello (D-Watsonville) and Assemblyman Mike Roos (D-Los Angeles). The Act enabled "Community Facilities Districts" (CFDs) to be established by local government agencies as a means of obtaining community funding. When California Proposition 13 passed in 1978, it restricted the ability of local governments to raise property taxes by more than an inflation factor. The budget for services and for the construction of public facilities therefore could not continue unabated. As a result, new ways to fund public improvements in respective locales were considered.…[READ MORE]

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