The Collected Works of Author and Blogger Larry Roberts

Archive for 2016

McMansions are no longer affordable or easily financeable in California, so builders will likely build fewer of them. Urban planners and environmentalists advocate high-density development near transit hubs. They entreat us to screeds outlining the demerits of McMansions, and extoll the virtues of walking in urban cores. Unfortunately, much to their chagrin, the buying public disagrees with them. Builders provide what buyers in the market demand. Visionaries may wish demand were different, and some want to force the market to bend to their wishes, but for most of the last 70 years, the buying public demanded a detached single-family house on a large lot. This may be about to change. Buyers preferences won’t change. Despite the concerted efforts of urban…[READ MORE]

Lenders wisely stopped from granting loans to nearly 1,000,000 unqualified borrowers over the last 6 years. Many people blame the last housing bubble on lenders and subprime borrowers. Lenders abdicated their responsibility to vet their borrowers' qualifications, and not surprisingly, many unqualified borrowers entered the buyer pool and ultimately defaulted on their mortgages, leading to millions of foreclosures. The disaster was exacerbated by the proliferation of Option ARM loans that both inflated house prices and masked the problems with borrower's ability to repay with teaser rates and negatively amortizing payments. When these loans caused all borrowers (not just subprime) to implode, crashing house prices took down the economy and millions of qualified and unqualified borrowers along with it. When so…[READ MORE]

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]

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