The Collected Works of Author and Blogger Larry Roberts

Archive for February, 2017

Rising mortgage rates since Trump's election already slowing home sales Since the mid 1990s, mortgage interest rates and home sales moved in opposite directions. Dodd-Frank made this inverse correlation even stronger. Back in February of 2013 when mortgage rates were near record lows, I wrote that future housing markets would be very interest-rate sensitive, despite assurances to the contrary from most macroeconomists. Last year I noted that fewer home sales or lower prices was sure to follow higher mortgage interest rates. Generally, volume precedes price, and as one would expect, the recent spike in mortgage rates is already hurting sales. The prevailing economic view is that the housing market would respond positively regardless of what happens with mortgage rates because…[READ MORE]

Reflections on 10 years of blogging My first post I am IrvineRenter (Inventory Cholesterol) debuted ten years ago on February 27, 2007. Over the last 10 years, I posted every weekday without fail. It’s been a source of joy and discipline that’s shaped my life, my career, and my character. During my ten-year run, I observed many trends come and go, and I learned a great deal about the art of blogging. Today, I want to share some of these observations with you. Blogging needs a purpose I started writing ten years ago because I wanted to save people from financial ruin. I firmly believed housing was a financial bubble, and I was right. I didn’t do it for money or…[READ MORE]

Was strategic mortgage default ruthless or merely accelerated? Very few strategic mortgage defaults were ruthless. Most strategic defaults were inevitable, and the borrower merely chose the timing. People form strong attachments to their homes. Walking away is never a decision they take lightly. We can discuss the pros and cons and come up with our own beliefs and attitudes about it, but the turnover of our housing stock caused by the housing crash will be very painful for those who go through it. Ruthless default or accelerated default? I write often about hidden premises buried within the arguments writers make. These distinctions are important, and unless we uncover our fallacious beliefs, we make erroneous judgments and carry false beliefs. I wrote…[READ MORE]

Below median for-sale inventories remain low Inventories of below-median homes are well below historic norms due to the large numbers of underwater borrowers, leaving first-time homebuyers frustrated. Back in late 2012, I predicted that Below-median home inventories may not recover for years, which it has. My reasoning was simple. For home inventories to recover, sellers must come back to the market. Since so many homeowners are underwater or lack the equity for a move up, particularly at lower price points, very few organic sales occur on below-median properties. Since lender can-kicking kept the foreclosures off the market, what was once a source of supply actually became a restriction of supply. Given these circumstances, it will be several years before inventories of…[READ MORE]

Are renters also to blame for nimby resistance to more housing? The conventional wisdom holds that renters favor new construction and homeowners oppose it because renters want more abundant and less expensive housing and homeowners want more valuable housing and less traffic. But is it really that simple? A new study says no. Nimbys oppose all development because they believe their neighborhood was perfect when they moved in, but new development removes beautiful natural features, clogs the roads with more traffic, and changes the character of the community they moved into. True Nimbys don’t evaluate the pluses and minuses of new development and form an opinion based on facts. True Nimbys oppose everything, and in doing so, they fail to…[READ MORE]

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