The Collected Works of Author and Blogger Larry Roberts

Archive for 2015

The home mortgage interest deduction is an expensive subsidy that doesn't warrant its cost. If you listen to the people who benefit most from government housing subsidies, there is never a good time to reduce or eliminate a source of government largess. If you’ve been reading this blog for very long, you have a finely tuned bullshit detector. Whenever you read the shrill cries of realtors, homebuilders, and high wage earning loanowners lamenting the dire consequences of reducing or eliminating the home mortgage interest deduction, your bullshit detector should tell you to discount whatever they say as the self-serving nonsense it is. The fact that the home mortgage interest deduction is in danger is scaring the bullcrap out of the…[READ MORE]

Real estate ownership has implications for both income taxes during the ownership period and capital gains on the sale. Some people buy houses because they are "tired of paying so much in taxes." Homeownership provides the taxpayer the ability to write off the cost of interest on a home mortgage, and they can deduct property taxes as well. Unfortunately, while these tax deductions may lower the bill to Uncle Sam, they come with a cost, and often in Coastal California, the cost outweighs the benefit. Many people end up paying more in interest than they save in taxes. So while it may relieve a high wage earner to avoid paying Uncle Sam, giving far more money to a banker makes…[READ MORE]

Historically, properties in this market sell at a 25.7% discount. Today's discount is 35.3%. This market is 9.7% undervalued. Median home price is $263,500 with a rental parity value of $407,700. This market's discount is $144,200. Monthly payment affordability has been improving over the last 8 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $172/SF to $173/SF. Resale prices have been rising for 2 month(s). Over the last 12 months, resale prices rose 4.4% indicating a longer term upward price trend. Median rental rates increased $11 last month from $1,752 to $1,764. The current capitalization rate (rent/price) is 6.4%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

As attorneys prevail with their statutory claims, tens of thousands of delinquent mortgage squatters will be awarded free housing. Wouldn't it be great if you could stop paying your rent or your mortgage and continue to live in your property with no further payments? If I were given the choice between getting a house for nothing or putting a third of my income toward housing, I would probably take the free house. Wouldn't you? In 2008 many people faced this choice. The banks were so backlogged with foreclosures they couldn't process them fast enough, and with prices crashing, banks lost their desire to process foreclosures as well. The result was a large number of people who strategically defaulted and lived…[READ MORE]

Shortages of both residential and commercial supply forces workers and businesses to flee high-priced California markets for lower prices elsewhere. California house prices are very high because we endure a chronic shortages of housing. We aren't in a house price bubble because the two alternatives for obtaining housing, rent or ownership, balance. As long as the relationship between renting and owning is balanced, the market for both is as stable as the overall economy. The weakness in this analysis is that it assumes either renting or owning is affordable, but if neither one is affordable relative to incomes, the market can be very unaffordable despite the balance between ownership costs and rent. I wrote that chronic shortages of housing supply…[READ MORE]

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