Larry Roberts real estate writing blog: February 2015

Friday, February 27, 2015

Debt Default: Eliminating government housing market subsidies will be painful

Government subsidies are like drugs. Once the market is exposed, the participants quickly become dependent, and like any addict that goes through detox, getting off the subsidies can be very painful. The housing market completely relies on government supports and subsidies with over 95% of the...
Eliminating government housing market subsidies will be painful

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Housing Market: Mortgage lending standards continue to tighten

Realtors, builders, mortgage brokers, basically anyone with a financial interest in a real estate transaction is complaining that lending standards are too tight. From the beginning of these complaints four years ago, it’s all been complete bullshit. Lending standards were completely...
Mortgage lending standards continue to tighten

OCHN: Profiting from adjustable-rate mortgages is lucky, not wise

Borrowers can save money in the short term with ARMs, but these loans carry significant risks, particularly when mortgage rates begin to rise again.

If someone buys in a cashflow property with an 8% yield, it’s an investment with a fairly predictable return. The soundness of the...
Profiting from adjustable-rate mortgages is lucky, not wise

Thursday, February 26, 2015

OCHN: Duh! Excessive mortgage debt causes high foreclosure rates

High foreclosure rates are caused by many factors, but by far the largest is a high loan-to-value ratio because it limits the borrowers options in default.

Defaults are loan disease. There are many causes of the disease, from unemployment to loss of market value, but there is only one symptom...
Duh! Excessive mortgage debt causes high foreclosure rates

Wednesday, February 25, 2015

Housing Forecast: The Ethics and Morality of Borrowing and Lending During the Great Housing Bubble

Did anyone who participated in the Great Housing Bubble stop to consider what was the right thing to do? As long as the money flowed in a river to homeowner’s doors, few cared. The river of free money isn’t flowing any more, and now we have to examine why this happened, or we risk...
The Ethics and Morality of Borrowing and Lending During the Great Housing Bubble

Mortgage Refinance: 17% of FHA loans delinquent in September 2012, bailout coming

Everyone knew this was coming. The FHA needs a bailout. When the final tally of losses at the FHA come in, everyone will act surprised. Nobody paying careful attention to what the FHA is doing will be shocked. They are absorbing the losses the banks could not by insuring loans with low down ...
17% of FHA loans delinquent in September 2012, bailout coming

OCHN: FHA wants to allow banks to make more bad loans

The FHA is lobbying the Justice Department on behalf of lenders who want to make bad loans with impunity.

At the most basic level, lenders, realtors, and borrowers inflated a housing bubble because they got everything they asked for. From 2004 to 2006, there were no barriers whatsoever to...
FHA wants to allow banks to make more bad loans

Tuesday, February 24, 2015

Mortgage Foreclosure: Generation pwned: for loanowners under 40, 48% are underwater

Pwned. A term originally coined by mistake when the word “owned” was misspelled by a video game programmer. The word has come to symbolize domination of one party over another, and it’s a particularly appropriate term for loanowners who bought a house hoping to...
Generation pwned: for loanowners under 40, 48% are underwater

OCHN: Existing home sales hammered; 2015 housing hopes pounded

As houses get more expensive, marginal buyers are priced out, and without toxic mortgage products to help, a depleted buyer pool causes low sales volumes.

To make people feel good for the holidays and to fill the void in real estate news from November to February, reporters entreat us to...
Existing home sales hammered; 2015 housing hopes pounded

Monday, February 23, 2015

USA Foreclosure: Planning to buy a home this spring? Why not wait?

Several months ago, I had a meeting with a representative of the OC Register who wanted to sell me ad space. During the conversation, he said the realtor community in conjunction with the OC Register needed to create a “buying frenzy” to help liquidate the abundance of distressed...
Planning to buy a home this spring? Why not wait?

Renter News: Income approach appraisals would stabilize house prices

Most people would agree that preventing financial bubbles is preferable to cleaning up the mess in the aftermath. The ups and downs of housing prices must end. The housing bubble shattered the dreams and aspirations of a generation. Some of the wealth lost was an illusion, but those who lost...
Income approach appraisals would stabilize house prices

OCHN: High-end house price crash hits Singapore

Money can flow out of a high-end real estate market for many reasons, most of which relate to government policy rather than natural market forces.

Local residents who don’t own real estate do not benefit from an influx of foreign investment because that investment drives up house prices...
High-end house price crash hits Singapore

Sunday, February 22, 2015

USA Housing: House listings increase, but MLS inventory still at very low levels

The good news is that house listings are up. The bad news is that they are still very, very low. It’s still a sellers market. I recently reported that housing inventory is up: Buyers aggressive, not stupid-aggressive. We have passed the extreme of the sellers market, but there are still...
House listings increase, but MLS inventory still at very low levels

Friday, February 20, 2015

Debt Default: With low supply and limited equity, many sellers are escewing listing agents

With inventory being in such short supply, anything put on the market is likely to sell easily. Two years ago when there were far more properties for sale than buyers who wanted them, professional marketing and broad exposure was necessary to attract a buyer’s attention. Not so today. This...
With low supply and limited equity, many sellers are escewing listing agents

Housing Market: Loanowners put too much faith in house price appreciation

Real estate appreciation is religion in California. Ever since the first bubble in the 1970s enriched a generation, everyone in California sees owning a home as a short cut to riches. The bubble of the 1970s saw dramatic price reductions in some areas and a lingering stagnation in others. Prices...
Loanowners put too much faith in house price appreciation

OCHN: OC new home sales fall a frightening 41%

A dramatic and unexpected decline in new home sales is either the sign of a market top or an opportunity to get a great deal this spring.

Has the OC Housing market peaked for this cycle? Is the current slowdown the sign of a major change in the market, or is it merely a lull that represents a...
OC new home sales fall a frightening 41%

Thursday, February 19, 2015

OCHN: Job growth won"t stimulate many home sales in 2015

When the economy creates low-paying and part-time jobs, the newly employed don’t qualify for home mortgages, and they don’t buy homes.

The conventional wisdom is that increased job growth inevitably leads to increased household formation and increased home sales, and although the...
Job growth won"t stimulate many home sales in 2015

Wednesday, February 18, 2015

Housing Forecast: Walk away from mortgage debt to secure your children"s future

Lenders are pressuring owners to repay their underwater loans by appealing to morality. As people strategically default and their lives improve, they tell their friends which triggers the next wave of strategic defaults. The pressure of morality gets less and less effective, particularly when bor...
Walk away from mortgage debt to secure your children"s future

Mortgage Refinance: Timing the housing market is important

When I developed the OC Housing News Report, one of the biggest challenges was to develop a rating system that would time the housing market to maximum advantage. As we’ve all seen over the last few years of constant government manipulation, its very hard to pick the exact bottom, and...
Timing the housing market is important

OCHN: Will stated-income (liar) loans make a comeback?

Some form of stated-income loan will likely be offered by portfolio lenders in the future, but it will be limited to borrowers with large down payments.

When lenders underwrite new loans, one of the fundamental tasks they perform is determining whether or not the borrower can repay; therefore,...
Will stated-income (liar) loans make a comeback?

Tuesday, February 17, 2015

Mortgage Foreclosure: More government policy changes to impact the housing market

The housing market is anything but stable. Decisions by banks, government regulators, the federal reserve, congress, and Treasury department officials have tremendous impact on house prices. For example, decisions at the federal reserve regarding interest rates have imbued the market with such...
More government policy changes to impact the housing market

OCHN: Lender offers FHA loans with no FICO score requirement

Underwriting loans to unqualified borrowers with super-low FICO scores is a recipe for another crisis of loan delinquencies and foreclosures.

Many have quipped that FHA has become the replacement for subprime because they have very low standards for qualification, a very low down payment...
Lender offers FHA loans with no FICO score requirement

Monday, February 16, 2015

USA Foreclosure: Renters deserve better than to subsidize loan owners

As a renter, I find the behavior of lenders, loan owners, and politicians galling. Lenders and loan owners inflated a massive housing bubble and priced me out of home ownership for over a decade. To make matters worse, politicians decided my tax dollars should go toward bailing out both parties...
Renters deserve better than to subsidize loan owners

OCHN: Strategic mortgage default spreads like a virus when conditions are right

When house prices are falling and it’s cheaper to rent than to own, strategic default becomes widespread, and banks are powerless to prevent it.

One of the great advances which has come from the Internet is the quick dissemination of useful information. In short, secrets don’t remain s...
Strategic mortgage default spreads like a virus when conditions are right

Sunday, February 15, 2015

USA Housing: With stagnant wages, what will cause rents and home prices to rise?

A growing economy and increasing productivity causes aggregate wages to rise. Higher wages provides workers with more income to bid up rents and house prices. But what happens when wages stagnate? Can rents and house prices continue to rise in such an economic environment? Real Wages Still Below...
With stagnant wages, what will cause rents and home prices to rise?