The Collected Works of Author and Blogger Larry Roberts

Archive for October, 2014

Whether one considers SoCal markets overvalued or fairly valued depends on how fair value is measured. What is the best measure of value in a housing market? The two most commonly accepted measures are price-to-rent and price-to-income, but both have a similar weakness: they don't consider the impact of fluctuations in mortgage interest rates. During periods of stable mortgage rates near historically normal levels of 7 to 9%, both measures of value work quite well; however, during periods of very low or very high rates, both measures give false signals. Trulia uses a combination of these methods to produce it's estimation of value. Rather than correct for the weaknesses of both methods, Trulia's methodology magnifies them. Notes: To get our…[READ MORE]

Lenders restricted MLS inventory to drive up house prices, which also drives up rent; higher rent makes it more difficult to save for a down payment. I recently asked, Do loan modifications cause rents to rise too? We know providing loan modification subsidies serves to increase home prices because it keeps these homes off the MLS and forces buyers to pay more for those properties not burdened by a loanowner surviving on a loan modification. That mechanism is well understood. What’s less obvious is the impact this has on rent as well. If the loanowner were not granted a loan modification, the resulting foreclosure would recycle the property and put it in the hands of an owner who would extract…[READ MORE]

A combination of high home prices, large debt loads, and caution about the recent housing bust deters Millennials from buying homes today. In the 60 years between World War II and the housing bust, each generation obtained an education, secured a job, got married, and bought a home in the suburbs, enshrining our nostalgic notions of the American Dream. Unfortunately, lenders destroyed all that. Irresponsible lending inflated a massive housing bubble, saddled a generation with onerous student loan debts, and poisoned the economy so many can't find a job, which caused many Millennials to postpone marriage, family, and buying a house. Most housing market analysts blithely assume Millennials will follow the same path as preceding generations once they have opportunity,…[READ MORE]

Please join me to see where I'm investing to earn 15%+ returns I'm emailing you because I want to share an opportunity with you to acquire properties for under $200,000 with a mortgage of less than $1,000/month with 25% down and earn $1500/month rent. As my friends and family know I'm a big believer in real estate as an investment. My goal has been to acquire at least two buy and hold cash flow properties for each one of my children, as many of you know, I recently had a fourth child, so it's time to buy two more properties. I try to share my strategies with as many friends, family members, and clients as possible. I believe that they can…[READ MORE]

House prices surprisingly fell in the Bay Area. Will the bursting Chinese bubble and a potential tech credit bubble cause money to flee the Bay Area? Back in January I asked, Is San Francisco, the most overvalued US housing market, going to crash? At the time, I challenged housing bears to construct a scenario where house prices could drop in the face of an improving economy and successful lender can-kicking. The premise of the original housing market collapse went something like this: People took on mortgage debt which couldn’t be sustained by current income; those borrowers were going to default, lenders would foreclose, lenders would liquidate their inventory, and the resulting flood of must-sell inventory would push prices lower quickly.…[READ MORE]

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