The Collected Works of Author and Blogger Larry Roberts

Archive for 2016

The tiny house movement is the extreme of housing and possession austerity. Would anyone with the means to live with more chose to live that way? When builders and developers create new projects, they generally produce a variety of floorplans to meet a market niche where they can reasonably expect to sell their inventory in a short period of time. In a typical residential subdivision, condos will range from 900-1,600 square feet, and detached homes can range from about 1,600 square feet all the way up to the monster McMansions 4,000 square feet or larger. In higher density projects, small studio apartments as little as 450 square feet are sometimes offered, but rarely do builders and developers make product any…[READ MORE]

Only high wage earners save on taxes due to the home mortgage interest deduction, and the benefit is lost due to higher house prices paid be everyone utilizing this tax subsidy. Does the home mortgage interest deduction serve any useful purpose? Usually, when the government subsidizes something, it ostensibly serves a greater public good, but if there was ever a greater good served by the home mortgage interest deduction (a debatable claim), this benefit has long since vanished. As it stands today, the deduction rewards a small segment of high wage earners (see article below). Further, those who gain from the deduction spend this savings on higher mortgage payments to pay for houses made more expensive by others utilizing this…[READ MORE]

There are four fundamentals that determine resale value: borrower income, allowable debt-to-income ratios, interest rates, and down payment requirements. When economists write about the fundamentals of housing, they usually mention job and wage growth, both of which impact sales (of special interest to homebuilders), but job and wage growth don't establishing the housing market's equilibrium price level. Job and wage growth are only important in that they impact a borrower's income, which is a true fundamental. Fluctuations in supply and demand are not fundamentals either. Restricted inventory caused by loan modifications and denying short sales---the tactic lenders used to reflate the housing bubble---these manipulations temporarily disrupt the natural balance, forcing buyers to substitute down in quality and elevate prices above…[READ MORE]

IRVINE, Calif., April 1, 2016 – OC Housing News Riverside County Housing Market Report: April 2016 Historically, properties in this market sell at a 18.5% discount. Today's discount is 25.8%. This market is 7.3% undervalued. Median home price is $309,700 with a rental parity value of $418,900. This market's discount is $109,200. Monthly payment affordability has been improving over the last 2 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $176/SF to $177/SF. Resale prices have been rising for 5 month(s). Over the last 12 months, resale prices rose 6.7% indicating a longer term upward price trend. Median rental rates increased $15 last month from $1,815 to $1,830. The current capitalization rate (rent/price) is 5.7%.…[READ MORE]

The National Association of realtors perpetuates the myth that investors are scooping up family homes and leaving potential buyers out in the cold. Many investors use the OC Housing News to search for properties because it provides a detailed investment analysis of every home available for sale in Orange, Los Angeles, and Riverside Counties. The calculations also show the cost of ownership an owner-occupant would consider in their deliberations. Right now, there isn't much in Southern California for investors to get excited about. The major REO-to-rental funds bid prices up to where the cashflow returns are marginal, and mom-and-pop investors find the prices too high to make the numbers work too. Over the last few years, the Southern California housing…[READ MORE]

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