The Collected Works of Author and Blogger Larry Roberts

Archive for July, 2013

The good news is that house listings are up. The bad news is that they are still very, very low. It's still a sellers market. I recently reported that housing inventory is up: Buyers aggressive, not stupid-aggressive. We have passed the extreme of the sellers market, but there are still far too few properties available for sale to believe deals are to be had. Ordinarily, housing inventory peaks during the summer and falls off the rest of the year. I don't foresee that happening this year. First, there are so few houses for sale and the market is so strongly in favor of sellers, that potential sellers won't be dissuaded from listing for fear that they missed the selling season.…[READ MORE]

A growing economy and increasing productivity causes aggregate wages to rise. Higher wages provides workers with more income to bid up rents and house prices. But what happens when wages stagnate? Can rents and house prices continue to rise in such an economic environment? Real Wages Still Below June 2009 Level By Jonathan House -- July 16, 2013, 9:54 AM Average hourly wages were unchanged from May to June after adjusting for inflation, the latest sign of households struggling to gain purchasing power in the aftermath of the Great Recession. The flat result stemmed from a 0.4% increase in average hourly earnings being offset by a rise in the consumer price index. Over the last 12 months, inflation-adjusted hourly wages…[READ MORE]

One of the contentious issues between housing bulls and bears is the existence of shadow inventory. Many bulls deny this inventory exists, and those that acknowledge it deny its impact. Many bears claim this inventory is much larger than reported, and some claim it will be unleashed on an unsuspecting public leading to catastrophic price declines. One of the main problems with shadow inventory is defining exactly what it is. There is no commonly accepted definition. Corelogic has the most widely accepted definition which includes the number of distressed properties not currently listed on the MLS that are seriously delinquent, in foreclosure, and REO. Shadow inventory has been declining largely due to the can-kicking loan modifications with their 40% failure…[READ MORE]

Over the last 40 years, California inflated three different housing bubbles. Starting in the 1970s with regulations like CEQA, California began to restrict growth. This inhibited builders and developers from bringing new product to market to meet demand in many areas. As a result, demand pressures caused prices to rise. Rather than react to rising prices as a deterrent to buying, the sudden upward price movements served as a catalyst for even more buying as homeowners became speculators hoping to cash in on rapid appreciation. As with all financial manias where asset values become detached from fundamentals, the first three housing bubbles all resulted in housing busts with each one being more severe than the last. As a result of…[READ MORE]

Ever since the May/June mortgage rate increases how did it impact the sizable California cash buyer, if any.  A cash buyer doesn't have to worry about mortgages except when these rates affect the larger housing market.  DataQuick's monthly report has noted the comparison of between the June and May cash purchase sales and there was a 14.5% drop in the cash purchases or in the form of down payments.  That's a pretty significant change in just one month.  Some people say it's seasonal but let's examine the data. Southland Home Sales Drop; Record Yr/Yr Gain for Median Sale Price Southern California home sales fell in June amid a still-tight supply of homes for sale, rising mortgage rates and a letup…[READ MORE]

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