The Collected Works of Author and Blogger Larry Roberts

Archive for March, 2016

Homeowners convert consumer debt into tax-deductible debt through home equity lines of credit. Since this debt is secured by real estate, homeowners also pay much less for it. HELOCs are making a comeback! This is great news for Ponzis who want free money from stupid lenders, but it's a dangerous warning for all of us who supplied taxpayer bailout money to the stupid bankers who gave out free money last time. With rates hovering near record lows, and with banks desperate to loan money, banks are offering those with good credit very favorable terms on helocs -- and borrowers take the free money. Ten years ago heloc lending was an open invitation to theft for millions of borrowers running personal…[READ MORE]

Buying distressed residential properties, fixing them up, and holding them through the recovery is a great way to earn huge profits. I am a big fan of buy-and-hold residential real estate, but that isn't the only way to make money from this asset class. Home flipping is one extreme, and permanent buy-and-hold is another. But is there anything in between? Yes, buying distressed properties and selling them when the economic cycle is most favorable is a viable investment strategy. However, the analysis is more complex, and timing is critical to the strategy's success. The two extremes of flipping or buy-and-hold are much easier to analyze and execute. When flipping, an investor needs to know the after-repair-value and the cost of…[READ MORE]

Financial bubbles are real. A recent academic study proves people change their behavior when they witness their neighbors making money with little effort. Everyone wants free money. A new academic paper provides strong evidence that the desire to obtain free money drives the insane behavior in financial manias. It's rather shocking that some academics believe there are no financial manias, instead concluding that rapid and unsustainable price increases are the rational action of an efficient market. The reality is that most investors are clueless herd followers that merely assume that everyone else around them must know more than they do, so when the herd piles in to one asset class or another, it must be for a good reason. It's…[READ MORE]

By saddling Millennials with copious amounts of student loan debt and by trapping Generation X in overpriced starter homes, Millennials endure too much debt and too little available supply to become homeowners. The largest generation in American history is not buying homes, and it's possible, the Millennial generation will shun homeownership entirely and remake the American Dream to their own liking. It didn't need to be this way. The Millennials could have followed in the footsteps of the Baby Boomers or Generation X, but the foolish lending of the 00s and the bailout policies that followed created the circumstances where many Millennials can't attain homeownership. How did the foolish lending of the 00s create this problem? First, imprudent student debt…[READ MORE]

IRVINE, Calif., March 1, 2016 – OC Housing News   San Bernardino County Housing Market Report: March 2016 Historically, properties in this market sell at a 25.7% discount. Today's discount is 32.1%. This market is 6.5% undervalued. Median home price is $279,600 with a rental parity value of $420,200. This market's discount is $140,600. Monthly payment affordability has been worsening over the last 3 month(s). Momentum suggests worsening affordability. Resale prices on a $/SF basis declined from $183/SF to $183/SF. Resale prices have been falling for 4 month(s). Over the last 12 months, resale prices rose 7.0% indicating a longer term upward price trend. Median rental rates increased $0 last month from $1,829 to $1,829. The current capitalization rate (rent/price)…[READ MORE]

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