The Collected Works of Author and Blogger Larry Roberts

As mortgage rates rise, home sales will decline, and if it goes on long enough, prices will fall. In rocketry, escape velocity is the speed required to propel an object into a stable orbit. In a housing market, escape velocity is a rate of price and sales volume increase necessary to sustain an increase in demand required to push prices higher for the long term. Escape velocity is the elusive dream of real estate pundits, a group who doesn’t understand what it was or why it disappeared (probably forever). In previous real estate cycles (pre Dodd-Frank), as prices went up and buyers were priced out of the market, lenders responded by offering affordability products toxic mortgage financing terms. As affordability…[READ MORE]

Home mortgage interest deduction encourages high wage earners to borrow more; capital gains tax exemption encourages wealthy to invest more in personal homes. The combined effect inflates house prices. Politicians promote home ownership through a variety of subsidies and tax loopholes, ostensibly to promote a sense of community and quell civil unrest, the modern bread and circuses. A 2014 Republican tax reform proposal curtails homeownership subsidies, and the proposal was vigorously opposed by realtors, homebuilders, and lenders who benefit from the subsidies. Supporters of the subsidies generally control the perception of their largess through planted stories in the financial media appealing to homeowners who rely on the subsidy to reduce their tax bills; however, those who want to reduce these subsidies occasionally gain…[READ MORE]

San Bernardino County Housing Market Report: August 2016 Historically, properties in this market sell at a 25.7% discount. Today's discount is 38.0%. This market is 12.3% undervalued. Median home price is $293,400 with a rental parity value of $480,400. This market's discount is $187,000. Monthly payment affordability has been improving over the last 5 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $191/SF to $193/SF. Resale prices have been rising for 6 month(s). Over the last 12 months, resale prices rose 7.7% indicating a longer term upward price trend. Median rental rates increased $13 last month from $2,006 to $2,020. The current capitalization rate (rent/price) is 6.6%. Rents have been rising for 12 month(s). Price…[READ MORE]

By providing more housing units, apartment developers will lower housing costs over time and relieve the pressure on Californian's personal budgets. Combating the chronic shortage of available housing in California requires building more places to live. It matters little if these new housing units are small apartments or large mansions. As developers build more, all segments of the housing market will be more affordable to everyone in California. How to lower housing costs Imagine what would happen if California legislators found the political will to actually solve the housing crisis in California rather than giving in to the Nimbys. If Governor Brown formed a committee and charged them with crafting a policy to bring housing costs down as quickly as possible without…[READ MORE]

Houses feel expensive because an unusually large percentage of the payment is going toward principal amortization. For the last few years, my monthly housing market reports rated most communities across Southern California highly, suggesting it's a very good time to buy a house. Yet despite this dispassionate review of the math, most people who actually shop for a house feel like prices are way too high. Why is that? Well, house prices are high. The federal reserve in conjunction with government officials reflated the housing bubble to restore collateral backing to lender’s bad loans. The housing bubble that peaked in 2005/2006 witnessed house prices 20 years ahead of their time. Reflating the housing bubble in 2016 still puts us 10…[READ MORE]

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