The Collected Works of Author and Blogger Larry Roberts

Archive for October, 2016

Buyers convince themselves rising mortgage rates won't impact them, but they fail to consider how rising rates will curb home price appreciation. I strive to educate this blog's many readers and dispel fallacies surrounding residential real estate. Sometimes, the public impresses me with their wisdom; For example, adjustable-rate mortgage use is very low despite the potential savings. However, when it comes to the impact of rising mortgage rates on housing, people prefer to stick their heads in the sand and hope for the best. Homebuyers consume Kool-aid with respect to their Coastal California home purchases. The bust is only four years behind us, but people already comment on how buying houses in Coastal California is the smartest investment someone can…[READ MORE]

Despite criticisms of the methods, L.A.s turf removal program eliminated millions of square feet of water-hungry grass. The recent drought in California prompted many stories of drought shaming that amounted to peer pressure to reduce water usage. People wore their brown yards as badges of courage and openly criticized their neighbors who spent water on green grass. Many nimbys used the water shortage as another reason to oppose new home development, but these nimbys failed to look in the mirror -- or perhaps out their front window because the biggest wasters of water were homeowners watering their lush green grass. Modern houses with water-saving toilets and showers and drought-resistant plants use a tiny fraction of the water used by older…[READ MORE]

New businesses help people overcome the hurdles of finding, securing, and managing rental properties in far-flung locales. Back in August of 2010, I bluntly told people to buy Las Vegas real estate. I noted that the median home in Las Vegas — a 3 bedroom 2 bath detached property — cost less than $500 per month to own while rents averaged over $1,000. Here is what I told everyone who would listen: "Anyone thinking of investing in Las Vegas, now is the time ... because the price-to-rent ratio is outstanding, and unless you are buying in the worst neighborhoods, I don’t see how prices could go much lower ... and the rental stream makes ownership there very rewarding. I am bullish on…[READ MORE]

California could cure its housing shortage by mandating that large projects and municipalities provide sufficient housing to match commercial development. California needs more housing. Everyone recognizes this fact, even the nimbys who oppose all new developments. California builders and developers fail to produce sufficient quantities of housing because they meet opposition at every turn. Nobody wants more housing because they associate housing developments with increased traffic congestion, pollution, and the destruction of the natural environment. California suffers from an economic malady known as the Tragedy of the Commons. According to Wikipedia, "The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to…[READ MORE]

Chinese housing isn't valued based on objective financial metrics. Investors buy what they believe others will find valuable. Encouraged by the government, the Chinese people support a massive real estate Ponzi scheme. Chinese investors value property subjectively, like a beauty contest, because by any standard metric, Chinese real estate prices justify very little value. The Ponzi scheme inflated far beyond any rational level, and it shows no signs of popping. So how does the government do it? How is an unsustainable bubble sustained? The government doesn’t provide savers any other viable alternatives for storing their wealth. Bank accounts and housing account for 85% of the investment wealth in China. Chinese concentrate their wealth in real estate because owning carries little…[READ MORE]

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