The Collected Works of Author and Blogger Larry Roberts

Archive for September, 2012

I recently wrote that the housing bubble creates a no-win political situation for either presidential candidate. Despite the political minefield housing policy creates, Mitt Romney has published a very brief and vague plan he hopes will excite voters. It won't. Housing: Fulfillment of the American Dream Overview For millions of Americans, homeownership is about more than just a place to live.  For many, owning a home is the fulfillment of the American Dream.  Yet today, the dream of home ownership is out of reach for many Americans as a result of President Obama’s failed policies and stalled economy. Owning a home is oftentimes the most significant investment a family makes during their lifetime.  The housing crisis of the last few…[READ MORE]

Shadow inventory is primarily a problem for major commercial banks. The GSEs have been processing their foreclosures, and although delinquencies at the FHA are increasing, these are fresh delinquencies, not long-term shadow inventory. The too-big-to-fail commercial banks have been endlessly can-kicking to delay what I believe are inevitable write downs. For as long as records on delinquencies were kept, rarely did the rate exceed 2%. Currently, it is over 10%! To make matters worse, the delinquency rate for commercial banks is not declining as fast as delinquencies overall. Over the last two years, the rate dropped from from a peak of 11.2% to the current 10.2%. If lenders continue at that pace, it will take another 16 years for delinquency…[READ MORE]

The Republicans under George Bush passed a series of tax cuts that are due to expire at the end of 2012. Republicans are making this a campaign issue by scaring voters with the specter of a "fiscal cliff." Economists have stepped forward with varying but dire predictions of the end of the US economy. Republicans hope they can scare enough people to win the upcoming election. They just might. Lost in the campaign rhetoric is a careful examination of what the expiration of the various tax cuts really means. Will expiring tax cuts cause housing to fall off a fiscal cliff? It might, but not in the way most pundits imagine. The real danger is not from a damaged economy.…[READ MORE]

When I grew up, I watched my parents work hard and pay their bills. Their house payment was the largest of of their bills, but they sacrificed to pay down their mortgage to eventually become payment free. This was the experience of most Americans, a collective lesson we learned about responsibility and deferred gratification. Lenders destroyed that and replaced it with a culture of Ponzi borrowing and a series of poisonous beliefs that turned responsible homeowners into reckless and irresponsible loanowners. How sweet it is... It wasn't enough to merely give millions of Ponzis billions in free-money loans. That alone would have irreparably harmed out culture. No, lenders didn't stop there. When the ATM benefits ran out, they allowed the…[READ MORE]

California has a long history of real estate bubbles. Cycles of boom and bust range back to the gold rush in the nineteenth century. Over the last forty years, California has experienced three major real estate bubbles. Each of them had different causes and sprung forth from different circumstances, but they all shared the common cycle of irrational exuberance leading to a boom followed by a crash back to fundamental values of rental parity. Historic Valuations by city Over the last month, I commissioned Brian Nadel (thanks, Brian) to download MLS rental data back to 2000. From other sources, I extrapolated rental rates back to 1988. I also purchased the resale data back to 1988 from DataQuick. From these various…[READ MORE]

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