The Collected Works of Author and Blogger Larry Roberts

Archive for April, 2016

There are four fundamentals that determine resale value: borrower income, allowable debt-to-income ratios, interest rates, and down payment requirements. When economists write about the fundamentals of housing, they usually mention job and wage growth, both of which impact sales (of special interest to homebuilders), but job and wage growth don't establishing the housing market's equilibrium price level. Job and wage growth are only important in that they impact a borrower's income, which is a true fundamental. Fluctuations in supply and demand are not fundamentals either. Restricted inventory caused by loan modifications and denying short sales---the tactic lenders used to reflate the housing bubble---these manipulations temporarily disrupt the natural balance, forcing buyers to substitute down in quality and elevate prices above…[READ MORE]

IRVINE, Calif., April 1, 2016 – OC Housing News Riverside County Housing Market Report: April 2016 Historically, properties in this market sell at a 18.5% discount. Today's discount is 25.8%. This market is 7.3% undervalued. Median home price is $309,700 with a rental parity value of $418,900. This market's discount is $109,200. Monthly payment affordability has been improving over the last 2 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $176/SF to $177/SF. Resale prices have been rising for 5 month(s). Over the last 12 months, resale prices rose 6.7% indicating a longer term upward price trend. Median rental rates increased $15 last month from $1,815 to $1,830. The current capitalization rate (rent/price) is 5.7%.…[READ MORE]

The National Association of realtors perpetuates the myth that investors are scooping up family homes and leaving potential buyers out in the cold. Many investors use the OC Housing News to search for properties because it provides a detailed investment analysis of every home available for sale in Orange, Los Angeles, and Riverside Counties. The calculations also show the cost of ownership an owner-occupant would consider in their deliberations. Right now, there isn't much in Southern California for investors to get excited about. The major REO-to-rental funds bid prices up to where the cashflow returns are marginal, and mom-and-pop investors find the prices too high to make the numbers work too. Over the last few years, the Southern California housing…[READ MORE]

Back in 2006 the housing bulls weren't just a little wrong. They were completely and totally and unequivocally incorrect in every way. I recently had a conversation with a CEO of a large housing market forecasting company. In our conversation, I told him about my experience as a housing bubble Cassandra who wrote anonymously for 18 months for fear of repercussion in the industry. He paused, looked at me with a grin, and told me that over the last several years many people told him they called the housing bubble---a humorous case of revisionist history. When I first heard this I was shocked. With everything I went through to hide my identity through my very public writing about the issue,…[READ MORE]

People shopping for houses today are unwilling to purchase substandard housing in hopes of trading up at some later date. Houses are expensive. Many renters would like to buy a house, but they lack the down payment necessary, and many renters are early in their careers when their income isn't high enough to purchase a home they would really like. As a result, first-time homebuyers purchase the least expensive properties available for sale in the housing market, using the highest-cost financing (generally FHA) due to their small down payment. Assuming they sustain ownership, assuming they utilized an amortizing mortgage, and assuming house prices rise, after some period of waiting, the first-time homeowners could sell their starter house---usually to another first-time…[READ MORE]

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