The Collected Works of Author and Blogger Larry Roberts

Archive for August, 2016

Riverside County Housing Market Report: August 2016 Historically, properties in this market sell at a 18.5% discount. Today's discount is 28.6%. This market is 10.1% undervalued. Median home price is $325,500 with a rental parity value of $458,600. This market's discount is $133,100. Monthly payment affordability has been improving over the last 6 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $181/SF to $182/SF. Resale prices have been rising for 9 month(s). Over the last 12 months, resale prices rose 6.6% indicating a longer term upward price trend. Median rental rates increased $9 last month from $1,919 to $1,928. The current capitalization rate (rent/price) is 5.7%. Rents have been rising for 12 month(s). Price momentum…[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. Many Chinese investors consider Irvine, California, a safe haven where they can store their wealth far from the controlling hands of Chinese government officials. As a result of this perception, Chinese investors buy a significant number of homes in Irvine -- anecdotally, Chinese Nationals buy 80% of properties in some new home communities. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up. Chinese capital is an unstable source of investment, and it…[READ MORE]

Self-driving cars will impact home design and community design of the future, but it won't be the big disruption to real estate values some imagine. Transportation systems provide access to property and facilitate commerce. Automobile road systems in particular take up tremendous amounts of real estate, and roads define the patterns in real estate development. Further, the need for cars adds 400 square feet or more to our houses that's largely useless as living space. But what happens if our relationship with the car changes? How does this impact housing or land development? Over the last few years as engineers make progress toward self-driving cars, many armchair futurists imagined what a world of driverless cars would look like. Most visions…[READ MORE]

High house prices are demanded by foolish Ponzis, enjoyed by real homeowners, and favored by politicians pandering to both groups. Why are high house prices the keep rising considered a universal good? Does everyone benefit if house prices are high and keep moving higher? When house prices move up faster than wages, who benefits, and who pays the price? Most people accept the idea that ever-rising house prices are good, and that a decline in house prices is bad. This idea seems to only apply to housing because ordinarily people cheer when the price of an essential product goes down, and complain when it goes up. Why is housing so different? Gasoline prices over the last few years yo-yoed between…[READ MORE]

Most real estate investors are really speculators betting on appreciation. It's a strategy destined to be a loser. One look at the MLS, and everyone sees that house prices are very high. People don't get as much house for their money because house prices rose faster than incomes. When house prices start moving up even when fundamentals don't support the move, speculators take notice. When speculators become active, they add to demand, pushing prices higher, potentially fueling a market mania. For many years, the astute observations on this site were very bearish -- and with good reason. Once the market bottomed, most of the bears went into hibernation, and the comments remained more objective and balanced for a few years.…[READ MORE]

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