The Collected Works of Author and Blogger Larry Roberts

Author Archive: Larry Roberts

Whether or not "responsible" homeowners lost their homes depends on how you define "responsible." A common theme in the financial media is that people lost their homes during the housing bust due to unemployment, probably because it's easier than acknowledging the bad loans and borrower profligacy. During the Great Recession (2008-2009), American businesses terminated more jobs than they created -- by a wide margin. More than 7 million people lost their jobs during a two-year stretch. I recently noted that US lenders completed 6,324,545 foreclosures over the last ten years. Does that mean the foreclosures were caused by the unemployment? To some degree, this is certainly the case. I bought a foreclosure from an unemployed construction worker in Las Vegas.…[READ MORE]

A house is worth no more than a buyer is willing to pay and no less than a seller is will to accept. Motivation of the Other Party Professional poker players spend hours studying people’s reactions to try to elucidate the cards their opponents are holding. In poker if players can determine what their opponents believe about the strength of their hands, they gain a significant advantage over the other players. If you know the motivations of the other party in a negotiation, you can respond by concealing your own motivation in hopes that the other party will either raise or lower their pricing to come to you. This is not deceitful; it is sound negotiating practice. The risk of…[READ MORE]

How much is a property worth? Is it whatever two parties agree to? Is value established by recent nearby comparable sales? Negotiating the sale of residential real estate is no more difficult that negotiating for any other product of service that doesn't have a fixed price; however, due to the colossal cost of houses, the process is more important financially than negotiating for other big-ticket items like automobiles. A mistake made while buying or selling a house could cost as much as a new car; sometimes such mistakes could pay for many cars. Skilled negotiators can obtain favorable pricing and terms without the assistance of a broker, but the novice who is inexperienced at this process often will not. Novice…[READ MORE]

Mortgage equity withdrawal is a bad idea that often leads to disaster. I have often wondered if I had made different decisions during the bubble if I would have been caught up in the frenzy. Although I don’t believe I could have fully ingested kool aid, I probably would have behaved like most of my cohorts and increased my loan balance. I consider those who did this with fixed rate financing and still managed to lower their payments as the sly ones. That is as far as I would have gone, but I probably would have taken some of the free money. The conditions that spawned the rally of The Great Housing Bubble are gone, and we will not see…[READ MORE]

Historically, properties in this market sell at a 9.5% discount. Today's discount is 16.0%. This market is 6.5% undervalued. Median home price is $534,900 with a rental parity value of $639,600. This market's discount is $104,700. Monthly payment affordability has been improving over the last 5 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $421/SF to $424/SF. Resale prices have been rising for 11 month(s). Over the last 12 months, resale prices rose 7.4% indicating a longer term upward price trend. Median rental rates increased $25 last month from $2,708 to $2,733. The current capitalization rate (rent/price) is 4.9%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

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