The Collected Works of Author and Blogger Larry Roberts

Archive for 2013

During the 00's many countries inflated massive housing bubbles. The readers of this blog are well acquainted with the issues surrounding the US housing bubble, but Spain, Great Britain, and Ireland, among others also inflated painfully deflating housing bubbles. Norway inflated a housing bubble during this period, but after a brief pullback, they went on to inflate an even larger and more potentially damaging one. As strange as this may sound, I believe the root cause of this enormous problem is good governance and sound fiscal management. Unlike nearly every other government, Norway has managed its budget and resources well. Norway has massive oil reserves in the North Sea, and they have been carefully saving and investing the taxes they…[READ MORE]

The typical sources of housing demand are largely absent. In particular, first-time homebuyer participation is at near-record low levels. First-time bomebuyers only make up 29% of the market today, compared to 40% in normal times. Without first-time homebuyers, long-term homeowners are unable to execute move-up trades. This causes sales volumes to flag across all market segments. Some point to the lack of first-time homebuyers as a significant source of pent-up demand. For example, more Millennials are living at home than any generation in recent history. Perhaps that generation will step forward and begin buying houses, but they face some significant headwinds which may keep them out of the market for many years. Young homeowners sidelined by employment woes Unemployment up…[READ MORE]

The housing rally of 2013 is over. We are past the peak selling season, and although the year-over-year numbers will still show gains, we are entering the time of the year when seasonal factors drag prices and sales volumes down. If we were in a normal market, we would see price declines over the next 4 to 6 months. However, these are not ordinary times. The big question right now is whether or not the combination of higher interest rates and seasonal factors will cause a brief pullback in the housing rally, or if we just witnessed the peak of another housing bubble. Mark Hanson among others makes a strong case that we just witnessed the end of the rally…[READ MORE]

When policymakers are considering a change, they like to float trial balloons in the mainstream media to gauge the reaction. Recently, the FHFA proposed lowering the conforming limit on GSE loans. As you might expect, the industry insiders dependent upon real estate transactions are not excited by the idea. Today, I want to take an objective look at the impact of lowering the conforming limit nationally, and its specific impact on Coastal California real estate. The conforming loan limit is designed to provide government-subsidized loans only to lower and middle income Americans. Loans above the conforming limit are provided by private lenders in what's known as the jumbo market. During the housing bubble, the conforming limit rose as high as…[READ MORE]

In 2011 the market was extremely favorable to buyers. There was plenty of inventory, and the sellers were motivated to sell at whatever the market would bear. Banks were liquidating their own portfolios of REOs, and short sellers were allowed to complete their transactions without the banks asking for repayment of the shortfall. Plus, prices were falling and buyers were rare. As a buyer in those conditions, you could buy what you wanted without competition and get a good deal too. Then 2012 rolled around, and lenders made a number of policy changes which caused the market to abruptly shift from an extreme buyer's market to an extreme seller's market, almost overnight. Lenders stopped foreclosing on delinquent mortgage squatters, and…[READ MORE]

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