The Collected Works of Author and Blogger Larry Roberts

Archive for August, 2014

The merger of Zillow and Trulia may force marginal agents out of the business and concentrate activity among the best producers. American realtors have long maintained a system of high commissions that bloats the number of working real estate agents. Many poorly trained and poor performing agents stay in the business despite completing few transactions because they can make a great deal of money on the few transactions they do complete. Real estate recessions purges many of these bad agents, but like April showers bring May flowers, increased sales volumes sprouts tens of thousands of new agents who cling to the margins. Other countries don't have our high commission system, and they have fewer real estate agents. In Great Britain…[READ MORE]

As mortgage interest rates go up, affordability declines. Only rising wages can offset the effect of rising mortgage rates. Will it be enough? When mortgage interest rates finally begin to rise up to historic norms, a move anticipated by nearly everyone, home affordability will suffer because borrowers will need to spend more money to pay their mortgages. Since most borrowers maximize their loan amounts, the only way to overcome the problem of rising mortgage rates is for borrowers to make more money. With high unemployment and low labor participation rates, employers don't need to increase pay to fill new jobs, and employees lack the leverage to force employers to pay more. But what if rising interest rates across the lending…[READ MORE]

The housing market is changing, but many sellers refuse to acknowledge the cooling market may force them to lower their asking prices. It's no longer a seller's market; wishful thinking and hope of a fall turnaround won't change that basic fact. Sellers are stubborn: even during the crash, many were unwilling to lower their prices to make a sale; after all, real estate only goes up, right? Real Estate's Epic Rebound Starts to Cool A Potential Rate Rise Also Poses Uncertainty By Gregory Zuckerman, Aug. 2, 2014 10:59 p.m. ET The U.S. real-estate market has stormed back over the past five years after enduring its most brutal period since the Great Depression. The rebound has rewarded investors and boosted the…[READ MORE]

Lenders slowly process loan modifications, mostly to avoid approving them. While they wait, most loanowners enjoy a free ride. Should we be concerned about the speed at which lenders process loan modification applications? After all, most borrowers who apply for a loan modification stop making payments during the process. They apply because they can't afford the payment in the houses they occupy, so they quit paying while lenders consider their applications. From a borrower's perspective, waiting may create uncertainty, but they gain the benefit of free housing for as long as it takes. Mortgage Relief Faces Mounting Backlog as Homeowners Await Aid Reporter: Christine Layton July 30, 2014 Financially struggling homeowners are facing long delays after turning to the foreclosure…[READ MORE]

A global economic slowdown could trigger a US recession and potentially cause another housing bust. The US economy struggles for growth five years after the Great Recession officially ended. Economists point to encouraging signs of future growth -- just as they erroneously have over the last five years. The green shoots meme is so old and overused that economists tire of using it, reporters tire of reporting it, and ordinary citizens tire of hearing it. Realistically, the US economy is still fragile, and a global economic slowdown could easily trigger a recession in the US, but would that recession cause another housing bust? Economist who predicted busted housing bubble says another recession is coming By Bernard Condon, Associated Press, Posted:…[READ MORE]

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