The Collected Works of Author and Blogger Larry Roberts

Archive for January, 2016

The federal reserve raised the federal funds rate, but that doesn't mean mortgage interest rates must rise. The future of housing in inexorably tied to the course of mortgage interest rates. If mortgage rates remain below 4.25%, both house prices and sales volumes will be higher in 2016 than 2015. An improving economy, strong job growth and rising wages are a recipe for a healthy housing market. Unless rising rates spoils the party, 2016 will be a good year. Does that mean there's no reason to worry? Hardly. The federal reserve is raising interest rates, and although this doesn't necessitate higher mortgage rates, it certainly encourages them. Higher mortgage rates will harm sales, and if rates rise high enough to…[READ MORE]

In a recent speech, Bernie Sanders unapologetically bashed the too-big-too-fail banks. He's a rare breed: an honest politician. I recently wrote that Donald Trump will be the next President of the United States due to his populist appeal. However, for people like me who really want to see the too-big-to-fail banks crushed to rubble, Bernie Sanders is a more appealing alternative to Donald Trump. When Donald Trump blusters, everyone knows it's just red meat supplied to augment the bread and circuses campaign to win the Republican nomination. Nobody really knows what Donald Trump believes or what he would do if elected President. On the other hand, Bernie Sanders means what he says, and he says he wants to break up…[READ MORE]

A rising US dollar makes Irvine homes much more expensive for Chinese buyers, and capital controls makes it much more difficult to move money out of China for those inclined to do so. Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem if this flow of money dries up. Both homebuilders and real estate agents delude themselves with notions about the desirability of Coastal California to convince themselves the influx of Chinese money is based on sustainable fundamental factors. In reality, this is hot money escaping an unstable…[READ MORE]

The OC Housing News published its monthly housing market report, covering resale home prices and rental rates across Southern California. IRVINE, Calif., January 2, 2016 – OC Housing News Los Angeles County Housing Market News January 2016 Historically, properties in this market sell at a 9.5% discount. Today's discount is 14.2%. This market is 4.7% undervalued. Median home price is $507,300 with a rental parity value of $589,300. This market's discount is $82,000. Monthly payment affordability has been improving over the last 3 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $407/SF to $409/SF. Resale prices have been rising for 10 month(s). Over the last 12 months, resale prices rose 5.4% indicating a longer term…[READ MORE]

Millennials are not climbing on the property ladder, upsetting everyone who depends on real estate transactions to make a living. A common refrain among housing industry advocates is that Millennials are simply ignorant to the benefits of home ownership, and if they could only be "educated" properly, they would shun renting in favor of owner-occupied housing. Apparently, Millennials are ignorant to both the benefits of home ownership and the lending options available to them. This is nonsense and wishful thinking. To the chagrin of housing industry advocates, Millennials are well aware of the perils of home ownership, and the education propaganda spouted by the housing industry falls on deaf ears. Millennials learned from the housing bust -- they learned house…[READ MORE]

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