The Collected Works of Author and Blogger Larry Roberts

Archive for November, 2016

Local officials in San Francisco denied a sound building project due to angst over Donald Trump's election and the persuasion of a Bernie Sanders sock puppet. Nimbys oppose new developments for two reasons. First, they don't want to deal with more people in their neighborhoods and on their streets, and second, they don't want competing housing supply on the market that would prevent the value of their house from inflating further. Since opposing new development carries no cost, and since killing new development brings rewards, the incentive is to oppose -- and nimbys no longer feel shame for this behavior. California NIMBYs don’t love their children. If they did, they would at least support enough new development to accommodate their…[READ MORE]

Local Chinese government officials and real estate developers corruptly conspire to take land from peasants without just compensation. In most countries around the world, a legal process known as eminent domain exists for taking private land for public purposes. Without eminent domain, we wouldn't have roads or other forms of public infrastructure necessary to sustain society. In the United States, and in most of the world, when a government body takes a piece of property through eminent domain, the person surrendering the property receives just compensation. If the parties fail to agree on what constitutes just compensation, they can petition the court to decide for them. In most instances, the courts render a fair and unbiased opinion of the value…[READ MORE]

The conforming loan limit is set to rise by 10,650 in Coastal California, reducing down payment requirements by $8,520 on homes prices above this limit. During the housing bubble, the conforming limit rose as high as $417,000, but when the housing bubble burst, this limit was raised to $729,750 in markets like Coastal California that needed the most government support to maintain peak prices. In 2011, the conforming limit was lowered from $729,750 to $625,000 ($546,250 in San Diego). The hard cap on FHA and GSE loans forces many borrowers to use a jumbo loan. Lenders who originate jumbo loans have stricter standards than the FHA or the GSEs, and most importantly, they require 20% down. Most potential buyers lack…[READ MORE]

The mortgage and foreclosure debacle of 2008 was cut short by government intervention. A second round of deferred distressed sales is yet to hit the market. Is the mortgage and foreclosure crisis resolved or merely delayed? Americans believe the mortgage and foreclosure crisis of 2008 is over, a misperception fostered by a financial media eager to disseminate good news. Most people were lead to believe an improving economy put people back to work, and those hard-working Americans cured their loans of past-due payments. Unfortunately, reality differs from the accepted narrative. While the notion of the noble borrower dutifully recovering from the perils of the Great Recession appeals to Americans, most borrowers were overextended before the recession hit, and lenders cut deals with these borrowers to…[READ MORE]

Most homeowners ignore the carrying costs during their ownership period when they calculate the gain or loss on a sale. If someone claims they bought a house for $900,000 and sold it for $1,000,000, how much money did they make? $100,000? No, not even close. People tend to forget about the transaction fees and carrying costs when they compute the gains and returns on their real estate purchases. In the example above, when the buyer paid $900,000, the actual costs paid at closing were probably $5,000 to $15,000 higher due to closing costs, appraisals, lender fees, insurance, and other miscellaneous closing costs. The homeowner lost another large chunk when they sold. Most people still pay a 5% to 6% commission…[READ MORE]

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