The Collected Works of Author and Blogger Larry Roberts

Archive for April, 2014

Voters warm to the idea of reforming Proposition 13, but large financial interests would vigorously oppose any attempts to curtail their subsidy. Property taxes have long been a source of local government tax revenues because real property cannot be moved out of a government’s jurisdiction, and values can be estimated by an appraisal, so it's a convenient item to tax. In most states, local governments add up the cost of running the government and divide by the total property value in the jurisdiction to establish a millage tax rate. California is forced to do things differently by Proposition 13 which effectively limits the appraised value and total tax revenue from real property, forcing local governments to find revenue from other…[READ MORE]

Bankers around the globe learned from the US how to reflate house price bubbles by removing distressed inventory and lobbying for government subsidies. Bankers in the US discovered the formula for reflating housing bubbles: remove distressed inventory from the market through loan modification, denying short sales, and permitting long-term delinquent mortgage squatting, then lobby the government for a variety of housing subsidies and stimulants to stoke demand. This two-prong approach reduces supply and increases demand forcing house prices to go up; in fact, the more severe the housing bubble and resulting crash, the more effective the policy is because greater residual mortgage distress equates to larger supply restrictions as underwater owners control most of the inventory. Bankers in the US…[READ MORE]

Rising rents make owning an attractive alternative despite the high home prices, so rising rents will likely push more people to buy rather than rent. After the big rally in home prices and the sudden increase in interest rates, houses feel expensive. In many areas, prices have reflated back to the peak of the housing bubble, and affordability has plummeted, prompting many to become bearish on housing. Despite these signs, my monthly reports still show the market as fairly valued, and when I look at individual properties, I see most are still selling for prices near rental parity, even in nicer neighborhoods. Part of the reason for this is low interest rates, but the other part of the equation is…[READ MORE]

  How can you not adore something so cute?  How could anybody tarnish the reputation of a loyal, cuddly, lover like a Pit Bull?  Maybe because they are vicious animals that have killed people?  Personally, I don't like Pit Bulls.  And I do not have a clue as to why it is legal to own one.  I can guess as to why some people may want one, but too bad.   I am a staunch defender of liberty and our Constitution, especially the bit about gun ownership, but I don't think anyone should be allowed to own a Pit Bull, Presa, Rottweiler, Cane Corso, etc., unless they live far from most people, own livestock, and are willing to face criminal…[READ MORE]

Despite the happy-talk from realtors, the housing recovery flounders on low volume, sustained only by low inventory. Most housing analysts expected sales to increase in 2014. They believed an increase in sales and an increase in price would represent “escape velocity,” a virtuous circle where rising prices increases demand and causes more sales and rising prices; in the past, this would have worked because lenders would extend toxic financing terms to new buyers to keep the party going, but the new mortgage regulations changed how real estate markets work. With those products now banned, the party ends when prices get too high — as it should. In Bold California housing market predictions for 2014, I said sales volumes would decline…[READ MORE]

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