The Collected Works of Author and Blogger Larry Roberts

More housing supply will reduce the competition among workers for available properties. More housing supply is certain to bring down housing costs in the long-term. California Governor Jerry Brown recently proposed to reduce the regulatory burden on real estate developers to facilitate construction of more new homes to increase supply and make housing more affordable. A bevy of special interests line up against the proposal, and most homeowners in California would prefer to maintain the status quo because a shortage of housing benefits them personally. Most of the arguments put forth against providing new supply lack merit, and the alternative is to do nothing and watch as house prices climb beyond the reach of all but a select few citizens.…[READ MORE]

The housing market can’t absorb a sudden or large increase in mortgage rates without major declines in sales and perhaps even decreases in prices. Congress passed the Dodd-Frank financial reform in response to the housing bubble and bust. These new Dodd-Frank mortgage regulations will prevent future housing bubbles by effectively banning destabilizing loan products with interest-only and negative amortization features. Banning these loans was important because those loan programs enabled buyers to greatly inflate house prices from stable levels set by wages and mortgage rates. In a stable housing market, the equilibrium price is the highest price consumers can finance, so under pressure to complete more deals, lenders seek ways to increase the size of the loans lenders provide borrowers.…[READ MORE]

2015 was touted as the year of the boomerang buyer. Lenders and realtors prepared, and the financial media wrote the invitations, but the boomerang buyers failed to arrive. Many people criticize the financial media for running negative stories that "talk down the market," but realistically, the financial media doesn't have the power to move markets, and when they report an uncomfortable truth without the sugary spin, some people complain. When it comes to financial news, people only want to read good news, news that reinforces their belief in the correctness of their investments and reaffirms their faith in lifelong financial prosperity. Thus we have an entire branch of media that only presents good news. Any news that isn't positive must be…[READ MORE]

Many people sell when prices rise high enough for them to retire, move up, or extinguish their debts. Many people imagine the property ladder as a progression from a condo near work, to a house in the suburbs, to a mansion by the beach. Many people buy entry-level housing, and when prices rise high enough for them to pocket a 20% down for a larger property, they participate in the move-up market. If their income grew while they lived in their entry-level home, the step up can be quite luxurious. If their income didn’t go up much, they are probably better off refinancing into a lower-cost mortgage and staying where they are. The housing bubble severely disrupted the housing market.…[READ MORE]

Historically, properties in this market sell at a 18.5% discount. Today's discount is 28.5%. This market is 9.9% undervalued. Median home price is $321,500 with a rental parity value of $451,100. This market's discount is $129,600. Monthly payment affordability has been improving over the last 5 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $181/SF to $181/SF. Resale prices have been rising for 8 month(s). Over the last 12 months, resale prices rose 6.3% indicating a longer term upward price trend. Median rental rates increased $24 last month from $1,903 to $1,928. The current capitalization rate (rent/price) is 5.8%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

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