The Collected Works of Author and Blogger Larry Roberts

Archive for 2016

Coastal housing markets face headwinds while inland markets benefit from Trump's economic policies. Coastal housing markets had a great run over the last 40 years. Land use restrictions created a shortage, falling mortgage rates inflated prices, wage growth created demand, and trade and tax policies favored upward distribution of income and wealth. The combination of all these factors caused residential real estate values to appreciate much more quickly on America's coasts than it did in the heartland. This may be about to change. Land Use Regulatory Relief Donald Trump stated during the campaign that he wanted to roll back land use regulations that restricted growth. I doubt he progresses much on this front, but he could initiate lawsuits that could negate…[READ MORE]

The Fair Housing Act may be used to strike down land development restrictions that cause a disparate impact on minorities, which California's process clearly does. Fact: California house prices are high relative to income due to a shortage of available homes. Fact: California Nimbys lobby local officials to prevent housing from being built to alleviate the shortage. Fact: Calfornia Nimbys will not change because they personally benefit from reduced traffic congestion and higher home prices. What can we deduce from these facts? First, education will make no difference. Some activists try to convince Nimbys to embrace more homes in their neighborhoods. It's a futile effort. I pointed out that Nimbys are hypocrites. I demonstrated that Nimbys don't love their own children. Most people…[READ MORE]

If California wanted to lower house prices, it could tax foreign investment and tax homes left vacant year-round. The primary reason house prices are so high in California is a lack of supply. However, a secondary reason is the influx of foreign investors, many of whom don't live in the properties or rent them out. These foreign purchases drive up prices for locals, and if they don't rent the property, the property disappears from the local housing stock entirely, making our shortage even worse. Buying and maintaining an empty box may be a sound investment decision for foreign investors; however, it's a negative for the economy because local residents must pay more for housing, which reduces the disposable income they…[READ MORE]

Orange County is no longer an LA County bedroom community. High-density condos overtake suburban detached homes as the dominant housing type. I recently noted that The FHA loan limit dooms McMansions in California. The FHA loan limit creates a down payment barrier that first-time homebuyers simply can't overcome. The down payment barrier forces residents to take one of three actions: (1) they move inland to find an affordable single-family home, (2) they substitute to a smaller attached home near work, or (3) they rent. For most OC residents, moving inland to find affordable housing means leaving Orange County entirely. Those who continue working here endure crushing commutes. So far, the Millennial generation opts to rent. Burdened by excessive student loan debt, restrained…[READ MORE]

Whatever legislation Congressional Republicans try to pass will be "talked to death" by Democrats in the Senate. No one knows what Donald Trump will do as President, but since he is an egocentric dealmaker, it's likely that he will want to sign legislation -- even bad legislation -- if he can attach his name to something. While he wields the power to influence Congress through the threat of a veto, he isn't an ideologue who will likely use his veto much. If Congress passes it, he will probably sign it. Establishment Republicans see this as an opportunity. They know Hillary Clinton would never have signed anything they passed, so while the Republican establishment may not like Trump, they see him as a…[READ MORE]

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