The Collected Works of Author and Blogger Larry Roberts

Archive for May, 2014

Artificially low interest rates and restricted inventory causes builders to focus on higher priced houses we don't really need. Homebuilding usually leads the economy out of recession. The Great Recession did not end with a building boom largely because of overbuilding during the housing bubble. A false price signal triggered excessive homebuilding, and it took five years to work off the inventories. The collapse of the housing bubble saw new home sales and construction fall to the lowest levels ever recorded — and those records go back to the 1960s. To make matters worse, rather than experiencing a sudden drop and a “V” bottom leading to a new boom, new home sales flat-lined at record lows for five straight years.…[READ MORE]

Analysts pointed to a massive housing bubble in China for many years, but property prices haven't crashed... until now. Anyone who talks about housing bubbles these days is immediately labeled a "doom and gloomer." It's a familiar refrain, often heaped on people like me who predicted a housing bust in the United States when few wanted to believe it was possible. Here in America, the bubble deniers -- and Never forget the bulls and bubble deniers were completely and totally wrong -- the bubble deniers succumb to their optimism bias and comforted themselves with fallacies and wishful thinking, even past the point where denying the obvious was no longer operative. The same is true in China. First, let's review some…[READ MORE]

There are 5 simple reasons why the financial media and housing pundits overestimated demand for homes and YoY growth in existing home sales in 2014. I like to acknowledge good writing on real estate matters when I don't think it gets enough attention. I found this article by a local loan officer, Logan Mohtashami. Senior Loan Officer DRE # 01426922 NMLS # 328173 Irvine, CA 949-291-8293 24/7 [email protected] Reprinted with permission: Why the Financial Media and Housing Pundits Got It Wrong Posted on May 5, 2014 by Logan Mohtashami Logan Mohtashami, Benzinga Contributor There are 5 simple and obvious reasons  why the financial media and housing pundits got it wrong in terms of demand for home purchasing and  year over year growth in existing home sales in 2014.        Lending…[READ MORE]

Banks kicked the can for five years, but they finally began ramping up foreclosure processing to clear out delinquent mortgage squatters. The headlines in the financial media give the false impression the foreclosure crisis is past. It's not. Millions of borrowers are not paying their mortgages, and millions more are making partial payments on doomed loan modifications. The banks bought time with loan modifications, but this was a temporary measure that allowed them to better manage their REO inventories and delay final resolution on their bad bubble-era loans. The day of reckoning, though delayed, has finally arrived, and banks are increasing their foreclosure processing to finally clear out the trash. Most housing economists failed to see this coming, which is…[READ MORE]

Too-big-to-fail banks face billions of dollars in claims from their bad behavior during the housing bubble. They deserve the pain. The bailouts of the too-big-too-fail banks irritated me (and many others). I would have far preferred to see the architects of the financial catastrophe of 2008 lose their jobs, their wealth, their social status, and be demonized for their atrocious behavior. Instead, we bailed them out, allowed them to keep their ill-gotten gains, and put them back in charge of our financial system. It wasn't right. Further, this is being sold to Americans as a necessary evil; ordinary people were "saved" by bailing out the 1%. Since there is no way to test alternate realities, we have no choice but…[READ MORE]

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