Friday, January 20, 2017

Federal Reserve"s Dudley predicts return of HELOC abuse

The Federal Reserve’s Dudley believes people will forget the lessons of the housing mania and return to profligate home equity spending.

When people lose money (or foolishly waste it), they often behave differently after the incident. Wise people actually take action to prevent a ...

Federal Reserve"s Dudley predicts return of HELOC abuse

Thursday, January 19, 2017

The weak case for occupancy after foreclosure

Some progressives want people to occupy houses they don’t own and don’t pay for.

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 d...

The weak case for occupancy after foreclosure

Wednesday, January 18, 2017

Yesterday"s Baby Boomers were better off than today"s Millennials

Millennials are worse off than Baby Boomers were at this stage in their life cycle.

Growing up in the Midwest, I remember the relative prosperity of ordinary families in the 1960s and 1970s. Working-class families supported themselves on union labor contracts granting them a high quality of...

Yesterday"s Baby Boomers were better off than today"s Millennials

Tuesday, January 17, 2017

Can unrealistic beliefs about appreciation cause a housing bubble?

It takes more than a manic desire to inflate a bubble. The ability to deliver capital to the market is also an essential element.

Many people who believe in the wisdom of the markets subscribe to the efficient markets theory. It postulates that market participants have equal access to good ...

Can unrealistic beliefs about appreciation cause a housing bubble?

Monday, January 16, 2017

The final frontier for land speculators: the moon

We running out of land! Buy now or be priced out forever! We’re even running out of land on the moon!

Most participants in financial manias share a common belief in the scarcity some precious resource. The notion that we’re “running out of land” sparked several financial man...

The final frontier for land speculators: the moon

Friday, January 13, 2017

How renters should prepare for homeownership.

Rent a property using 23% or less of your gross income and save 8%. This prepares you for a 31% debt-to-income payment and provides a quality of rental you could later buy.

I never embraced the innovations in real estate finance that inflated the housing bubble. I never considered any financing...

How renters should prepare for homeownership.

Thursday, January 12, 2017

Home sales likely to fall in 2017

High house prices and rising mortgage rates will hurt affordability and offset any gains from wage growth and an improving economy.


Have you looked for a home to buy lately? They’re expensive, and although 4% mortgage rates enable buyers to finance those prices, mortgage rates only ...

Home sales likely to fall in 2017

Wednesday, January 11, 2017

Bold California housing market predictions for 2017

The housing market will flourish or flounder depending on mortgage interest rates.

For each of the last three years, I made a series of bold predictions for the upcoming year. You can judge for yourself how I did:
Bold California housing market predictions for 2014
Bold California housing...

Bold California housing market predictions for 2017

Tuesday, January 10, 2017

Would you surrender future equity gains for a lower house payment?

Investors will supplement down payments in exchange for a share of future profits. Would you make a deal like that?

Are there any circumstances under which homebuyers would be willing to share in the upside of home price appreciation? Would you sell an option worth 35% of the upside in exchange...

Would you surrender future equity gains for a lower house payment?

Monday, January 9, 2017

How rising mortgage rates erode homeowner equity

One man’s mortgage debt is an entire neighborhood’s equity. Higher mortgage rates put pressure on the size of mortgage balances, potentially eroding homeowner equity.

When a buyer purchases a house, their purchase sets a standard by which the value of other houses is inferred. When a house sel...

How rising mortgage rates erode homeowner equity

Friday, January 6, 2017

Should free shelter be a basic entitlement?

During the housing bust, every effort was made to keep homeowners in their houses. Renters were mercilessly thrown in the street with little or no fanfare.

Our real property system functioned well for centuries with very little change. Prior to the housing bubble, it was widely accepted that...

Should free shelter be a basic entitlement?

Thursday, January 5, 2017

Are bad housing solutions better than no solution at all?

Any legislation or policy that promotes housing production is better than producing no housing at all.

In the post, Will building more roads and houses merely increase demand?, I lamented that nimbys managed to turn the solution into part of the problem. They embrace the idea of “induced ...

Are bad housing solutions better than no solution at all?