The Collected Works of Author and Blogger Larry Roberts

Archive for November, 2014

As home prices go up, homeowners can't resist tapping their home equity to restart their personal Ponzi schemes. When the credit crunch of 2007 abruptly curtailed the flow of money into residential mortgages, every homeowner who ran a personal Ponzi scheme was suddenly cut off. Many perished financially; they lost their homes in foreclosure because they couldn't afford to make payments or pay bills without the infusions of borrowed money -- the essence of a Ponzi scheme. But now lenders underwrite HELOCs again, and many homeowners take advantage of the free money at very low rates. Lenders today evaluate repayment capacity better than before, and lending standards remain prudent and loss averse; however, lenders succumb to competitive pressure to reduce…[READ MORE]

The National Association of realtors predicts home sales will rise in 2015 despite rising mortgage rates -- not going to happen. A project manager is concerned with time, quality and price, and in any project it's only possible to get two of the three. To obtain high quality work quickly, the price will be high; to obtain high quality work and a good price, it will take longer; and to finish the job quickly for a low price, quality will suffer. It isn't possible to maximize all three. Similarly, in real estate markets, there are three related variables: mortgage rates, sales price, and sales volume, and it's only possible to obtain two of the three. In order to obtain higher…[READ MORE]

Record low first-time homebuyer participation and low savings rates will force bureaucrats to lower the FHA insurance premium to stoke demand. I believe the FHA will come under intense pressure to lower the FHA insurance fees in order to increase home sales to first-time homebuyers. So why do I believe that? I recently noted that first-time homebuyer participation rates hit a three-decade low, a major problem for the long-term health of the housing market. My market studies show the housing market is still relatively affordable, yet home sales are weak, particularly among first-time homebuyers. My reports measure affordability based on conventional mortgages with a 20% down payment because those terms don't require mortgage insurance, a costly add-on that has varied…[READ MORE]

The US Justice Department used the threat of whistleblower testimony to extort an additional $6 billion out of JP Morgan Chase. 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. The anger toward the banks is deeply rooted. Many people who lost their homes blame the banks (even if it was really their own fault), and many people decry the way banks were…[READ MORE]

Historically, properties in this market sell at a 0.6% premium. Today's discount is 1.6%. This market is 2.2% undervalued. Median home price is $568,100 with a rental parity value of $585,500. This market's discount is $17,400. Monthly payment affordability has been improving over the last 4 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis declined from $375/SF to $374/SF. Resale prices have been falling for 1 month(s). Over the last 12 months, resale prices rose 6.8% indicating a longer term upward price trend. Median rental rates increased $33 last month from $2,616 to $2,650. The current capitalization rate (rent/price) is 4.5%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

Page 4 of 6123456