The Collected Works of Author and Blogger Larry Roberts

Archive for 2016

Homebuilder confidence rose the most on record last month entirely due to the election of Donald Trump. I spent most of the last four months meeting with homebuilders. The people in my office spend most of their time dealing with homebuilders. As a group, we interact with all of them, so we have a unique perspective on homebuilders' world view. Despite being in California where an overwhelming majority of people are Democrats, homebuilders are mostly Republican. Homebuilding is an entrepreneurial business that chafes at regulation, so it shouldn't be terribly surprising to see so many Republican homebuilders. If Hillary Clinton had won, I don't believe homebuilders would have been despondent, but they would have expected more of the same -- increasing regulations…[READ MORE]

Forcing communities to accept housing like we force them to accept solar panels could solve California's housing crisis. Actions speak louder than words. Politicians pontificate on many issues, and they pander to their constituents to gain reelection. However, the laws they pass reflect what they really mean and value. Based on that criteria, California politicians clearly want solar panels and green energy far more than they want sufficient housing to accommodate our growing population. Once the cost of solar panels came down enough to be cost effective, the early installations weren't greeted with universal acclaim. Early solar panel arrays were large, bulky, and unattractive. Solar panels generally must face south (in the Northern Hemisphere) to point at the sun. If…[READ MORE]

Due to a high rate of amateur participation and a lack of accurate information, housing markets are among the least efficient in the financial world. The efficient markets theory postulates that speculative asset prices always incorporate the best information about fundamental values. Adherents to this theory believe that prices change only because new information enters the market and investors act in an appropriate, rational manner with regards to this information. It's a gratifying theory that portrays investors as wise and rational. Unfortunately, it has no basis in reality. Efficient markets theory dominated academic fields in the early 1970s. Academics attempted to tether asset prices to fundamentals through the common-sense notion that people would invest their money rationally. This theory encapsulates…[READ MORE]

If mortgage rates keep rising, home sales will be lower in 2017 than in 2016, prompting talk of another housing recession. Remember all those stories assuring us that higher mortgage rates wouldn't cause any problems with housing? Well, today's featured article is the story where they debunk years of wishful thinking and expose the masses to basic math. It was a long time coming, but I'm glad the financial media is finally breaking the bad news. This isn't rocket science. It doesn't take a supercomputer or a math savant to calculate how much rising mortgage rates will hurt the market. And it doesn't take a genius or a housing market guru to decipher how this will impact housing. For every…[READ MORE]

Illegal immigration advocates attempt scaring policymakers with the specter of a housing crisis caused by mass deportations. Advocates for dubious political policies often resort to scare tactics in hopes that policymakers will favor their policy prescriptions. For example, the advocates of fiscal austerity trumpeted the fear of rampant inflation while most economists stated increased stimulus would achieve a more positive effect. The austerity advocates resorted to emotional appeals and dubious reasoning that later proved wrong. Advocates of strict marijuana laws alarmed politicians with the dangers of legalization, but as more states decriminalized and finally legalized marijuana, very few negative side effects emerged. The latest advocates to resort to dubious arguments are those opposed to deporting illegal immigrants. It's difficult to argue in…[READ MORE]

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