The Collected Works of Author and Blogger Larry Roberts

Archive for 2012

The arguments about whether there is or is not a shadow inventory have gotten silly. There is a shadow inventory, and there are certain facts we can establish about it. First, there are millions of delinquent mortgage squatters who will not be given free homes. The exact number is impossible to ascertain because no accurate records are kept outside the banks who aren't accurately sharing this information. Since the banks aren't disseminating accurate information (why would they?), CoreLogic, who relies on voluntary information, consistently under reports the problem. Second, the disposition of these properties will require a sale on the MLS. This may be as an REO after a foreclosure, or it may be as a short sale in lieu…[READ MORE]

It's been difficult to be bearish in 2012. First, we had the chorus of perennially wrong bottom callers make their usual prognostications, then Calculated Risk called the bottom, then the banks unexpectedly and abruptly slowed their rate of REO processing to create a shortage of MLS inventory. This MLS shortage has resulted in bidding wars, rising prices, and falling sales volumes. With those conditions, even the serious problems overhanging the market look insignificant. Most of the bears have gone into hibernation and their views have been largely ridiculed much like they were in 2006. Even I have caved in to the market bulls. It's hard to argue for lower prices when affordability is high and supply is low. There are…[READ MORE]

President Obama's housing policies have been as successful as the circumstances would allow. Back in June I quipped, Obama’s housing policy succeeded wildly by failing spectacularly. Personally, I would have preferred he let the banks go bankrupt, nationalize them, fire management, recapitalize the banking system, and sell them off the bank's stock when the economy recovered. Unfortunately, the flash-point of the crisis occurred while Bush was still in office, and these institutions were deemed too big to fail. Obama continued Bush's flawed policies and looked for solutions that did not bankrupt the banks. This left few good options. Once bank bankruptcy was taken off the table, the natural corrective mechanisms in the system could not be allowed to function. Mark-to-market accounting…[READ MORE]

Pwned. A term originally coined by mistake when the word "owned" was misspelled by a video game programmer. The word has come to symbolize domination of one party over another, and it's a particularly appropriate term for loanowners who bought a house hoping to "own" it, and instead they find themselves being "pwned" by the house. I first wrote about this phenomenon in 2008: Generation Y began buying starter homes in earnest during the Great Housing Bubble. Generation X is just now coming into their prime earning years, and many of them bought move-up homes at inflated bubble prices. The Baby Boomers took their equity and bought multiple properties during the bubble. They all have one thing in common: they…[READ MORE]

The housing market is anything but stable. Decisions by banks, government regulators, the federal reserve, congress, and Treasury department officials have tremendous impact on house prices. For example, decisions at the federal reserve regarding interest rates have imbued the market with such high payment affordability that buyers can finance the still-inflated prices of the previous bubble. Banks decided early this year to slow the rate they took back properties at foreclose auctions thus reducing MLS inventory of REO significantly. Government regulators changed accounting rules in 2009 to allow banks to keep delinquent mortgage squatters in place with delayed millions of foreclosures for many years. The GSEs, now run by the Department of Treasury, are liquidating their portfolios and changing the…[READ MORE]

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