The Collected Works of Author and Blogger Larry Roberts

Sometimes people make large sacrifices to obtain a home of their dreams; however, sometimes they aren't willing to sacrifice at all. Whenever people buy a home, they make tradeoffs. Do they want to live near the beach in a small condo, or do they want a McMansion and a lengthy commute? In a larger sense, most people also chose whether they want more house or more disposable income. In California, most people feel compelled to sacrifice disposable income to obtain better housing because the alternative is often quite Spartan. The chronic shortage of housing inventory inflates California house prices to very high levels and forces most people to settle for far less than what they would enjoy anywhere else. Contrary…[READ MORE]

By offering private mortgages with only 1% down, Quicken Loans encourages speculators to gamble with other people's money. If most people were to go to Las Vegas and gamble with $1,000 of their own money, they would be cautious; if they lost, they would feel the pain of that loss, and the fear of the consequences would prevent them from taking crazy risks. But instead imagine how their behavior would change if someone else gave them $990, and they only had to put up $10. Ostensibly the $990 would be a loan, but if the gambling borrower is unable to repay, they would simply walk away and default on the loan. Further, those without the capacity to repay would know…[READ MORE]

San Bernardino County housing market report: June 2016 Historically, properties in this market sell at a 25.7% discount. Today's discount is 36.0%. This market is 10.3% undervalued. Median home price is $286,300 with a rental parity value of $451,000. This market's discount is $164,700. Monthly payment affordability has been improving over the last 3 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $188/SF to $190/SF. Resale prices have been rising for 4 month(s). Over the last 12 months, resale prices rose 8.9% indicating a longer term upward price trend. Median rental rates increased $27 last month from $1,921 to $1,948. The current capitalization rate (rent/price) is 6.5%. Rents have been rising for 12 month(s). Price…[READ MORE]

Finished lot prices tightly tether to new home prices. Both are elevated above historic norms due to low mortgage rates. When mortgage rates first dropped from 6.5% in 2006 to 4.5% in 2009, I warned people that the interest rate stimulus was artificial, and while low rates inflate prices, they are a temporary stimulus with potentially painful withdrawal symptoms as the stimulus is tapered. Since conspiring bankers successfully manipulated the housing market in order to increase the collateral value backing their bad loans, the powers-that-be feel they have no choice but to stimulate housing even if that stimulus induces painful side effects. For the most part, the manipulations of the housing market worked since 2012. By denying short sales, modifying…[READ MORE]

While foreclosures are emotionally painful, in the aftermath a new family moves in to the foreclosed home, and the foreclosed family loses an onerous debt obligation. It's a win-win. It's sad when someone is forcibly evicted from their family home. People develop strong emotional attachments to real property, so many people feel compassion and empathy for those enduring such a difficult loss. Since nobody wants to feel the pain of loss, many people suggest we should stop foreclosures. (See: Should evictions be banned to stop hurting people’s feelings?) When people rally to stop foreclosure, they forget there is a next chapter to the story. What happens to the family and the house after the foreclosure? First, the house doesn't sit…[READ MORE]

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