The Collected Works of Author and Blogger Larry Roberts

Archive for October, 2014

Foreign and non-resident owners who view houses as an investment bid up prices in local real estate markets and price out local residents. Taxing a commodity or a behavior makes it more expensive, which thereby lowers demand, so if legislators want to see less of some behavior or resource, they should tax it. Legislators should want to see less foreign investment in single-family residential real estate because this activity prices out owner-occupants who must compete for the resource. Although lenders and loanowners may want to see higher home prices to bail them out of their foolish bubble-era loans, people who want to buy homes don't relish high prices. Current homebuyers don't like being priced out by aggressive investors, so if these investors…[READ MORE]

 When the interest rate stimulus ended in mid 2013, sales slumped. Does the market need a dose of low rates, or should we wait for jobs to improve sales? Government officials, lenders, and the federal reserve will do whatever's necessary to prop up housing prices. Over the last five years, they suspended proper accounting rules, extended tax breaks to buyers and loanowners, reduced mortgage interest rates to record lows, withheld inventory from the MLS, awarded bad behavior with bailouts, printed money, and bombarded the financial media with feel-good stories designed to stimulate buying activity even if it harmed those buyers. To people willing to bend, break, or rewrite rules of proper financial conduct, the cure for housing's woes are whatever…[READ MORE]

Soaring rents is preventing people from saving for a down payment, but saving is a critical first step to become a home owner. The biggest barrier to sales today is the lack of a down payment. In the post How restricted for-sale housing inventory saps demand, I demonstrated how stagnant wages and high rents hinders people from saving enough to obtain a down payment on a house. It's one of a number of reasons Millennials aren't buying homes at a stage in their lifecycle when previous generations did. During the housing bubble, people had access to 100% financing, so few were saving for a down payment. After the housing bubble, the Great Recession caused many people to dip into savings just to…[READ MORE]

Homeowners generally feel more confident in their ability to make ends meet, largely because they fixed their ownership costs long ago. The need for shelter is basic, often closely followed by the desire for community. In the United States, this often translates into a desire to take on a very large mortgage to buy real estate. These basic human emotions drive much of the activity in real estate markets. Most people buy because it is the right time for them. Their career, age, family circumstances all come together to push people toward ownership at different times. The most damaging aspect of our current system is the price volatility because it randomly rewards some and destroys others. Some lucky people buy…[READ MORE]

With high prices, a perception of high risk, and little appreciation potential, many young renters see little reason to buy a house. People can obtain shelter in one of two ways: they can rent, or they can own. Each method of possessing real estate has its advantages and drawbacks, and the rent versus own decision is never clear cut. Much of the work I've done with the display of property information on this site is to help people gain clarity on the financial implications of renting versus owning, but there are intangible, emotional issues that may tilt the balance one way or another. The primary emotional draw of ownership is the sense of permanence. Ownership is primal; in fact, the…[READ MORE]

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