The Collected Works of Author and Blogger Larry Roberts

Archive for 2016

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]

California nimbys prevent the construction of housing needed for the next generation of Californians. Last month I wrote about how American Dream equates with home ownership, and the California Dream resembles the exclusionary policies of the landed gentry of Elizabethan England. Like the working classes of Elizabethan England, the working class in California is doomed to rent from the landed gentry -- the antithesis of the American Dream of homeownership. Besides the death of the American Dream and the creation of a permanent underclass of transitory renters, the California model of the neo-landed-gentry disturbingly excludes our children from the homeownership club, sentencing many of them to this new renting underclass. It's apparent that the people responsible for this mess, California Nimbys, don't love their…[READ MORE]

With millions trapped underwater, and with those with equity experiencing weak wage growth, most people choose to remain in their homes rather than moving up. Americans love their homes. Over the last decade, they became so enamored with their abodes that many decided not to leave. Prior to the housing bust, homeowners remained in place for a little over four years on average. Over the last decade, that timeline stretched to nearly eight years. Why are people staying in their homes so long? While some people undoubtedly found their dream home years ago, people retain their current home for reasons other than their affinity for it. Nearly 6 million people remain trapped in their entry-level homes they purchased a decade ago. Perhaps…[READ MORE]

At this point in history, the benefits of an overheating economy outweigh the detriments of a little inflation. The Federal Reserve controls the economy's gas pedal. They can step on the pedal by lowering rates to inject more fuel into the economic engine. They can also let off the gas by raising interest rates. For the last eight years, the federal reserve held the pedal to the metal, but even at top speed, the economy wasn't firing on all cylinders. Finally, the economy appears to be recovering from the 2008 recession. Unemployment is low, growth is stable, and wages are finally starting to rise. With as dismal as the economy has been for the last decade, many probably wonder why…[READ MORE]

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