The Collected Works of Author and Blogger Larry Roberts

Archive for May, 2014

Rising house prices is bringing more inventory to the market, but many of the sellers have unrealistic expectations for what they can sell their house for. Despite the equity-crushing housing bust of 2007-2009, a short but furious price rally from early 2012 to mid 2013 revived animal spirits and rekindled faith in home price appreciation, the official religion of California. Religious faith is great for people looking for peace of mind in a chaotic world, but it doesn’t apply well to investments. People who chose to believe an investment opportunity will turn out well simply because they want it to are often disappointed by the results. Financial markets generally don’t respond to faith, prayer, or wishful thinking. Faith in home…[READ MORE]

 Higher house prices were supposed to stimulate spending, but instead the increased debt service has taken money out of consumers pockets, reducing spending. The bailouts of banks and the housing market were sold to us on the premise that rising house prices would stimulate the economy through the wealth effect. In theory, as people saw their personal balance sheets improve, they would stop saving so much and begin spending money again, and that additional spending would cause all economic activity to increase. Rising house prices was supposed to be a panacea curing all our economic woes. Well, house prices are up, yet the economy still sputters. Were the economists and politicians who touted this idea wrong? Housing Won’t Save the…[READ MORE]

The housing bust tarnished the American Dream dream of home ownership, and a new generation chooses to rent instead. Is this a permanent change? The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens. Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it; every generation coming equally, by the laws of the Creator of the world, to the free possession of the…[READ MORE]

Should the size of houses be regulated to fit within the character of the neighborhood, or should owners have the right to build what pleases them? By Russ Wetherill, May 10, 2014 They say that beauty is in the eye of the beholder, and that one man’s ceiling is another man’s floor (both physically and metaphorically). America was founded on the principle of individual rights, but how do we resolve disputes when one man is jumping both on his own floor and his neighbor’s ceiling? One man’s right to swing his fist ends where another’s nose begins; but, the indiscriminant swinging of a nose into a fist can’t be the fault of the fist, can it? It’s hard not to…[READ MORE]

So far the economic recovery created low-paying jobs incapable of supporting mortgage payments thus failing to stimulate home buying. In a housing market where lenders, the federal reserve, and government officials don't conspire to artificially inflate house prices, the primary driver of prices is job and wage growth that leads to new household formation. If businesses expand and create new, high-paying jobs, those new employees take their new wages and bid up the price of available housing alternatives. If the the jobs are low paying, the new employees will bid up rental prices or occupy new rental units. If the jobs are high paying, the new employees will bid up the prices on nearby residential real estate. The last six…[READ MORE]

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