The Collected Works of Author and Blogger Larry Roberts

Archive for April, 2015

Data shows very few recent mortgage originations were from borrowers with a previous foreclosure. Over the last several years, the financial media periodically runs stories about the return of boomerang buyers, those who lost their homes in foreclosure but bought again. From the beginning I flatly stated this group would not participate in the housing recovery, and they would not be a significant source of demand. In the most complete study conducted on the behavior of boomerang buyers, the authors concluded that "Only about 10% of borrowers with a prior serious delinquency regain access to the mortgage market within 10 years of their default." So why did so many analysts think it would be different after the housing bust? Most…[READ MORE]

Lenders are willing to provide HELOC money requiring no payments until the time of sale if the borrower splits the remaining equity. Are there any circumstances under which homebuyers would be willing to share in the upside of home price appreciation? I wrote about the concept of equity share as an option for housing bears. In that program, an investor puts up half the down payment in exchange for half the net profit at sale. Anyone who believes house prices will not rise would strongly consider such a deal because someone else ties up their money in the property rather than the buyer. Of course, then the property is burdened by a third-party equity claim, which most people don't find…[READ MORE]

Most markets trade at or below rental parity, and those with a long-term ownership horizon obtain significant benefit to owning. Renting versus owning is both an intellectual decision and an emotional one. The intellectual decision is first and foremost a financial analysis of the comparative cost of renting versus owning. The basis of this analysis is a price point called rental parity. Rental Parity is the price where rent is equal to the monthly cost of ownership. When rent and the cost of ownership are imbalanced, it often signals individual properties or entire markets are overvalued or undervalued. I expanded on the rental parity concept to create detailed housing market reports, and develop the analysis of each for-sale property on…[READ MORE]

North Tustin with its large, opulent homes consumes more water per capita than any other community in Southern California. Water Board Report: Small OC Town Using More Water Per Day Than Beverly Hills April 8, 2015 10:29 PM COWAN HEIGHTS ( — As the state, ever drought-weary, continues to crack down on water-abusing communities, a neighborhood in Orange County has been exposed as having used more water per person and per home than any other community in either Los Angeles or Orange counties. The neighborhood of Cowan Heights sits north of Tustin, and numbers analyzed from the state water board say the community there is using up double the amount of water Beverly Hills is currently using. The report suggests…[READ MORE]

Historically, properties in this market sell at a 0.6% premium. Today's discount is 6.3%. This market is 6.9% undervalued. Median home price is $560,500 with a rental parity value of $593,400. This market's discount is $32,900. Monthly payment affordability has been improving over the last 11 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $375/SF to $375/SF. Resale prices have been rising for 2 month(s). Over the last 12 months, resale prices rose 4.7% indicating a longer term upward price trend. Median rental rates increased $0 last month from $2,599 to $2,599. 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]

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