The Collected Works of Author and Blogger Larry Roberts

Archive for September, 2016

Forecasters begin their yearly extrapolation of existing trends and pass it off as a genuine forecast. A few weeks ago I announced that I began a new position as Market InSite's Chief Economist. When people hear about what I do, one of the first questions they ask is "what's going to happen in the real estate market?" I never answer this question directly. I usually tell them it depends on what happens with job growth, income growth, and mortgage interest rates. So far, I haven't been asked to issue a forecast, and I hope they don't. I could issue a forecast. I'm fully capable of projecting future performance by examining past trends, but is that really forecasting? In my opinion,…[READ MORE]

Permitting mother-in-law suites will increase supply, but it also brings more potential problems to neighborhoods that allow it. There goes the neighborhood. Most homeowners fear what might happen if their neighbors rent out rooms or convert their garages to makeshift apartments. These new tenants in the neighborhood might park cars in front of their house, block their driveway, party all hours of the night, and generally behave like the degenerates and loser renters they were trying to escape when they bought a suburban house. Neighborhood character matters. If developers were permitted to purchase properties in existing neighborhoods of single-family homes, demolish them, and then put up a factory, it would turn the neighborhood into something other than what the remaining homeowners bought into.…[READ MORE]

It costs so much to live in California that many people flee the state in search of lower cost housing and a better quality of life. California is an expensive place to live. Due to the chronic shortage of housing supply that inflates California house prices and rents, many people can't afford to live in the state. The problem is particularly acute for low-income Californians who often spend 50% or more of their income on rent, sometimes doubling or tripling up with other families to afford the cost of housing. When housing is in short supply, the substitution effect forces buyers at every price level to buy a lower quality house than they otherwise would. At the very bottom of the housing…[READ MORE]

Many new companies form in Silicon Valley because they gain access to capital and a large well-trained workforce. But high housing costs forces wages up to attract talent, raising the start-up costs, and reducing the number of start-ups funded. Many entrepreneurs with great ideas for new businesses flock to Silicon Valley, the largest incubator of start-ups in the country. Many wealthy investors and funds with the specialized expertise to identify and nurture start-ups live and work in Silicon Valley, so entrepreneurs looking to start new ventures go where the money is. Once these start-ups secure funding, they must execute their business plans. Just as the entrepreneurs flock to Silicon Valley, the influx of venture capital draws workers with the unique skills…[READ MORE]

Hawaii tops the list of the states with the highest percentage of borrowers who refuse to pay their mortgages for three years or more. A free house in Hawaii handsomely rewards bad behavior, doesn't it? Millions of Americans borrowed money under unstable loan terms during the housing mania of the 00s. When these loans reset or recast to higher payments, millions of borrowers stopped paying, which precipitated the 2008 recession, causing millions more to stop paying their mortgages. The downward spiral lead to over six million foreclosures nationally. Once these borrowers failed to make payments, banks foreclosed on them -- at least at first. By late 2008, it became apparent that foreclosing on all these delinquent loans at once and…[READ MORE]

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