The Collected Works of Author and Blogger Larry Roberts

Archive for September, 2016

Dodd-Franks limitations on affordability products ensure housing cycles won't see raucous rallies and devastating declines. To everything (turn, turn, turn) There is a season (turn, turn, turn) And a time to every purpose, under heaven A time to build up, a time to break down A time to dance, a time to mourn A time to cast away stones, a time to gather stones together The Byrds (and Ecclesiastes 3) Prior to the 1970s, there was no housing cycle. There were periods where housing did well and periods when housing did poorly, but this was generally in response to larger economic cycles. Starting in the 1970s many jurisdictions began restricting housing type and location, leading to shortages and the first major…[READ MORE]

Do Millennials reject the American dream of home Ownership, or does it reject them? When the Baby Boomers and Generation X entered the workforce, their student loan debt was manageable, they found good jobs, and when they wanted to buy a family home, prices were affordable. Those generations assumed it was their birthright to enjoy the American Dream of a stable job and a family home of their own. For the Millennial Generation, that isn't their reality. It's difficult for the previous generations to imagine borrowing $100,000 or more to obtain a degree only to find that after struggling to graduate that a high-paying job didn't materialize. Further, the older generations can't comprehend searching for a house only to find…[READ MORE]

Borrowing money to pay debt is the most common form of personal Ponzi scheme. Lenders cloak debt consolidation and HELOC spending as sophisticated when it's really a fool's errand. The Millennial Generation was too young to participate in the housing bubble of the early 00s. Instead, Baby Boomers and Generation Xers were the sophisticated financial geniuses who over-borrowed and overpaid for housing on a grand scale. What's the main reason they did this? They wanted free money. Rather than learn from the mistakes of the previous generation, Millennials embrace the same foolishness. Apparently, sacrifice and planning for tomorrow are overrated concepts. Carpe diem — “Seize the Day” — The first Ponzi Why do people make foolishly irresponsible financial decisions? Sometimes…[READ MORE]

Higher priced houses are affordable to many families with high incomes, but many families lack the hefty down payments necessary to close the deal. Last year I reported that Housing inventory is abundant at prices buyers can’t afford. The constant refrain in the financial media is that home sales are weak because sellers refuse to list and sell their homes. This is only partially true. Sellers' reluctance to list at reasonable prices constrained sales, but not for the reasons commonly stated in the financial media. Sellers list their properties in sufficient numbers, but not at prices affordable to buyers. Since sellers must net enough at closing to pay off their supersized bubble-era loans, they ask too much money, and they resist lowering…[READ MORE]

Suburban sprawl doesn't create affordability. Instead, it's a sign of community policies that encourage production of all kinds of housing. Affordability is a function of the quantity of housing, not housing type. Most urban planners and landscape architects dislike suburban sprawl. Admittedly, much of suburbia is a bland, placeless morass of cookie-cutter houses, underserved by poorly designed transportation systems. Well-designed suburbs like Irvine are more the exception than the rule. The uninspired past of suburbia warrants criticism, but communities like Irvine prove that nothing about suburbia is intrinsically negative. Urban areas can be just as poorly executed as suburban ones, and favoring high-density development near transit hubs does nothing to guarantee the quality of life will be any better for residents…[READ MORE]

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