The Collected Works of Author and Blogger Larry Roberts

Archive for July, 2016

Most feedback I receive from readers is positive, but occasionally someone with an opposing point of view has an emotional reaction and writes me to correct my many misconceptions. I recently ran the post, Responsible homeowners did not lose their homes in foreclosure. In that post I made the case that most foreclosures were caused by overborrowing rather than unemployment or other unforeseeable events. Not everyone agrees with my view of the world, and one reader in particular was incensed enough to write me about it. As with most victim rants, this one points to everyone and everything else to blame for their outcome in life. This woman blames the banks, insurance companies, even the weather for her misfortune. Nowhere…[READ MORE]

Historically, properties in this market sell at a 25.7% discount. Today's discount is 37.0%. This market is 11.4% undervalued. Median home price is $289,300 with a rental parity value of $465,800. This market's discount is $176,500. Monthly payment affordability has been improving over the last 4 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $189/SF to $191/SF. Resale prices have been rising for 5 month(s). Over the last 12 months, resale prices rose 8.4% indicating a longer term upward price trend. Median rental rates increased $41 last month from $1,949 to $1,990. The current capitalization rate (rent/price) is 6.6%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

School ratings reflect where concerned parents move with their children, not the quality of education a school provides. Parents want to provide their children with every advantage in life. Those students with the best education generally enjoy higher wages and greater life achievement than students from school districts with low achievement scores. Parents react to inequities of our education system by shunning poor performing districts in favor of higher rated ones. Thus real estate values are higher close to better schools. Many parents shopping for a house obsess over the school ratings. They aren't chasing the ratings because of abstract correlations to a better life. Parents seek out these schools because they believe the quality of education is higher and…[READ MORE]

More housing supply will reduce the competition among workers for available properties. More housing supply is certain to bring down housing costs in the long-term. California Governor Jerry Brown recently proposed to reduce the regulatory burden on real estate developers to facilitate construction of more new homes to increase supply and make housing more affordable. A bevy of special interests line up against the proposal, and most homeowners in California would prefer to maintain the status quo because a shortage of housing benefits them personally. Most of the arguments put forth against providing new supply lack merit, and the alternative is to do nothing and watch as house prices climb beyond the reach of all but a select few citizens.…[READ MORE]

The housing market can’t absorb a sudden or large increase in mortgage rates without major declines in sales and perhaps even decreases in prices. Congress passed the Dodd-Frank financial reform in response to the housing bubble and bust. These new Dodd-Frank mortgage regulations will prevent future housing bubbles by effectively banning destabilizing loan products with interest-only and negative amortization features. Banning these loans was important because those loan programs enabled buyers to greatly inflate house prices from stable levels set by wages and mortgage rates. In a stable housing market, the equilibrium price is the highest price consumers can finance, so under pressure to complete more deals, lenders seek ways to increase the size of the loans lenders provide borrowers.…[READ MORE]

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