The Collected Works of Author and Blogger Larry Roberts

Archive for February, 2016

Though realtors and politicians like to present home ownership as an entitlement, it's really a privilege bestowed on those who can sustain it. We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. US Declaration of Independence Did you notice that in the defining statement of American Entitlement, the right to own a single-family detached home was not mentioned? I remember when I learned to drive, I was told repeatedly that driving was not a right, it was a privilege, a privilege I earned by learning the rules of driving and demonstrating good judgment. Why…[READ MORE]

As the Yuan declines in value, houses become increasing expensive to Chinese Nationals, prompting further erosion of new home sales to this large buyer group. Last month I asked Will the slowdown in China hurt Irvine real estate? There is little doubt that stopping the flow of Chinese capital will impact new home sales in Irvine. Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem if this flow of money dries up. Last year I documented that Chinese real estate investors are less active in Irvine. For years, Chinese could export cash by setting up dummy foreign corporations that import goods into China. The dummy corporation sends a bill to the Chinese mainland for…[READ MORE]

House prices should continue to rise in Las Vegas as cloud inventory supply restrictions and undervalued conditions persist. Back in 2010 when house prices were crashing, I advised people to buy Las Vegas real estate because I believed it was a good value. With house prices at 1995 levels, even if they fell further (which they did), it only made good deals even better. House prices rebounded strongly in early 2012 due to the manipulation of supply, but despite the strong house price rally, the market is still undervalued. One of the problems with long-term price charts is that straight-line technical analysis often understates the appropriate support or resistance levels. If the same data is plotted on a logarithmic scale,…[READ MORE]

Some normal housing demand was delayed to the recession, but no great influx of demand is likely forthcoming. Pent-up demand is the idea that many, many more people would participate in a financial market if some temporary barrier were removed, a barrier currently preventing them from participating today. Since polling data shows a very high percentage of people want to own a house but only about 60% actually do, theoretically, there is always pent-up demand waiting to be unleashed. The primary barriers preventing more people from buying homes are down payments, qualification standards, and verifiable income. All three of these barriers were eliminated during the housing bubble by 100% financing, fog-a-mirror qualification standards, and liar loans. As a result, homeownership…[READ MORE]

As house prices rise and more homeowners possess equity again, some are withdrawing this money at low rates and spending it, stimulating the economy. During the housing mania, people bought homes because house prices rose rapidly, and lenders gave equity to homeowners at 100%+ of the value set by recent comps. Under such circumstances, houses were very desirable, and it added fuel to the housing mania, and funded millions of personal Ponzi schemes. Homeowners like mortgage equity withdrawal because it provides them instant access to the free money bestowed upon them by the magic appreciation fairy. Homeowners gladly suspend their disbelieve at the too-good-to-be-true nature of free money, and if lenders willingly dole it out, homeowners eagerly accept it. Politicians…[READ MORE]

Page 4 of 6123456