Larry Roberts real estate writing blog: April 2015

Thursday, April 30, 2015

Real Estate Loan: One man"s mortgage debt is an entire neighborhood"s equity

Residential real estate is generally valued by comparable neighborhood sales. When a property sells for a new high price, it doesn’t just affect the value of that property, it impacts the value on all similar properties within a mile of the new sale. During the housing bubble, neighbors...
One man"s mortgage debt is an entire neighborhood"s equity

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OCHN: NAr lowers projections for boomerang buyers

realtors accept reality that boomerang buyers will not return in large numbers.

Economic predictions follow a repeating pattern. At first economists pander to everyone’s optimism bias and proffer predictions based on recent trends and dominated by wishful thinking. Later, when reality of...
NAr lowers projections for boomerang buyers

Wednesday, April 29, 2015

Housing Forecast: Strategic Default: The $10,000,000,000 Monthly Economic Stimulus

The HELOC abusers stimulated the economy when they borrowed all that money and spent it. Now that these same people are walking away from their mortgages, they no longer have housing payments, and their spending amounts to about $10,000,000,000 each month. Perhaps we should thank them for all...
Strategic Default: The $10,000,000,000 Monthly Economic Stimulus

Mortgage Refinance: Rising down payments and loan costs hindered the housing recovery

Besides credit qualification barriers due to low FICO scores, there are two barriers to originating more loans and selling more houses to owner occupants: (1) insufficient down payment, and (2) increasing loan costs. The FHA still originates loans at 3.5% down, and the credit barriers are...
Rising down payments and loan costs hindered the housing recovery

USA Housing: Millennials: pent-up housing demand or lost generation?

An astonishing number of the 18-31 year age cohorts are living with their parents. This large group of young adults are not currently forming new households and stimulating housing demand. When they finally move out — if they ever move out — they will demand either rental housing or...
Millennials: pent-up housing demand or lost generation?

OCHN: Bank bashing must continue until the too-big-to-fail banks crumble

Too–big-to-fail banks should be bashed continually until the weight of political discontent forces their breakup.

The bailouts of the too-big-too-fail banks irritated me (and many others). I would have far preferred to see the architects of the financial catastrophe of 2008 lose their...
Bank bashing must continue until the too-big-to-fail banks crumble

Tuesday, April 28, 2015

Mortgage Foreclosure: Debt-to-income ratios must be limited to prevent future housing bubbles

In The Great Housing Bubble, I wrote about how we could prevent the next housing bubble: Loans for the purchase or refinance of residential real estate secured by a mortgage and recorded in the public record are limited by the following parameters based on the borrower’s documented income and g...
Debt-to-income ratios must be limited to prevent future housing bubbles

OCHN: Isn"t it obvious the federal reserve causes asset bubbles?

Monetary policy implemented by central banks around the world creates the conditions where investors inflate asset bubbles by chasing yield.

We hold these truths to be self-evident
Those are the first words of the US Constitution. Along with equality and inalienable rights, we could add another...
Isn"t it obvious the federal reserve causes asset bubbles?

Monday, April 27, 2015

USA Foreclosure: Will dwindling housing supply cause resale prices to rise or sales volumes to fall?

As anyone watching the housing market in the Southwest in 2012 can attest to, inventory is falling. At its current rate of decline, there will be literally no houses for sale by the end of the year. We established that banks are cutting standing REO inventories by reducing new acquisitions by ...
Will dwindling housing supply cause resale prices to rise or sales volumes to fall?

Renter News: Why do people buy homes? Why shouldn"t they?

The need for shelter is basic as is the desire for community. In the United States, this translates into a desire to take on a very large mortgage to buy real estate. These basic human emotions drive much of the activity in real estate markets. Most people buy because it is the right time for...
Why do people buy homes? Why shouldn"t they?

OCHN: Are cloud inventory homes really for sale?

If a home seller asks a price buyers are unwilling or unable to pay, is the house really for sale?

One of my goals for the writing and analysis on this site is to provide readers a vision of the future of the housing market. Where are prices going? What will happen with sales? How do the...
Are cloud inventory homes really for sale?

Saturday, April 25, 2015

Real Estate Ruin: Grifters for God: fraudulently occupying a $1.3M home for five years

One of the cartoons I post when appropriate is called the National Squatters Entitlement. It speaks to a truth about people’s attitudes toward home ownership. People convince themselves they own property even if they have no equity claim. Their names may be on title, but all they really...
Grifters for God: fraudulently occupying a $1.3M home for five years

Friday, April 24, 2015

Debt Default: Home builder confidence and employment signaled a slow recovery

We just had a small spike in the number of new home starts, Larry Roberts just had a excellent post on the historical size of this increase. In addition, with banks very successfully stopping cloud inventory from going on the market, builders are wasting no time to build more housing units. T...
Home builder confidence and employment signaled a slow recovery

Housing Market: Low housing inventory is an indicator of residual mortgage distress

The cost of ownership numbers proclaim now is a good time to buy. However, the available inventory is so low that actually purchasing a home is nearly impossible. As I’ve written many times, the banks have engineered much of this shortage by endless can-kicking through loan modifications...
Low housing inventory is an indicator of residual mortgage distress

OCHN: How to analyze rental properties with hedge fund algorithms

The OC Housing News analyses every for sale property on the MLS for its potential as a cashflow investment based on advanced hedge fund algorithms.

Between late 2010 and early 2012, I purchased 53 homes in Las Vegas — sight unseen. I used a service that provided pictures of the...
How to analyze rental properties with hedge fund algorithms

Thursday, April 23, 2015

OCHN: OC Housing Market Event, 6:30, May 7, JT Schmids, District in Irvine

I invite you to an event Shevy Akason and I are hosting at 6:30 on Thursday, May 7, at JT Schmids at the District. We provide free appetizers and drinks for your entertainment.
Shevy and I would like to meet with you. If you arrive early, we guarantee you one-on-one time to discuss the housing...
OC Housing Market Event, 6:30, May 7, JT Schmids, District in Irvine

Real Estate Loan: New mortgage regulations will prevent future housing bubbles

Last week I wrote about How the new mortgage rules will impact the housing market. Since then, even more regulations were announced. After thinking about the ramifications of these new regulations over the last week, I am surprisingly relieved by what I see. I think these new regulations really ...
New mortgage regulations will prevent future housing bubbles

OCHN: The nightmare of reverse mortgages

Reverse mortgages sacrifice a financial future and result in many potentially negative outcomes.

I’m not a big fan of debt, in case you didn’t notice. I don’t like consumer debt, and I really don’t like reverse mortgages. I wrote that Home ownership with no mortgage is the best retirement plan. ...
The nightmare of reverse mortgages

Wednesday, April 22, 2015

Housing Forecast: The Speculative Housing Bubble Mentality Still Governs the Market

The housing bubble and the kool aid mindset it spawned has been very disruptive to American life. Large segments of our population are addicted to Ponzi finance, and the prudent are being robbed to pay for the mistakes of the Ponzis. I find the IHB is an outlet for the frustrations with the ins...
The Speculative Housing Bubble Mentality Still Governs the Market

Mortgage Refinance: Bernanke pledged to do what he can to reflate the housing bubble

The monthly housing market reports I publish each month became bullish late last year due to the relative undervaluation of properties at the time. I was still cautious due to weak demand, excessive shadow inventory, the uncertainty of the duration of the interest rate stimulus, and an overall...
Bernanke pledged to do what he can to reflate the housing bubble

USA Housing: The bogus housing rebound narrative bankers believe

In early 2012 lenders embarked on a new policy of choosing loan modification and squatting over foreclosure. Their goal was to dry up the distressed inventory and create an imbalance between supply and demand that would force buyers to compete over limited inventory and drive prices higher. So...
The bogus housing rebound narrative bankers believe

OCHN: Should we pay the federal reserve to store wealth in currency?

Would you allow the federal reserve to ban currency so banks could charge you to store your savings?

Money is both a medium of exchange and a store of wealth. Money represents the stored value of labor not immediately converted to consumption. Historically, people used scarce items like gold...
Should we pay the federal reserve to store wealth in currency?

Tuesday, April 21, 2015

Mortgage Foreclosure: Bank"s residential loan delinquency rates more than FIVE times historic norms

Shadow inventory is primarily a problem for major commercial banks. The GSEs have been processing their foreclosures, and although delinquencies at the FHA are increasing, these are fresh delinquencies, not long-term shadow inventory. The too-big-to-fail commercial banks have been endlessly...
Bank"s residential loan delinquency rates more than FIVE times historic norms

OCHN: Mortgage lending standards should not be relaxed further

Lending industry and realtor lobbyists argue lending standards are too tight and should be loosened up. They are wrong on both counts.

Real estate industry lobbyists appeal to lawmakers for policies the real estate industry believes will promote more transactions at higher prices. Most often...
Mortgage lending standards should not be relaxed further

Monday, April 20, 2015

USA Foreclosure: Obama"s housing policy succeeded wildly by failing spectacularly

President Barack Obama’s housing policy has been assailed by both sides of the political spectrum. The Right criticizes him because any government involvement in the housing market is socialist meddling (I happen to agree with the Right on this issue). The Left criticizes him for not going...
Obama"s housing policy succeeded wildly by failing spectacularly

Renter News: Banksters should be held accountable for ruining the housing market and economy

The banksters taking over our country enjoy extraordinarily nice lives of caviar and cigarettes. They’re insatiable greed is only surpassed by their lack of accountability. In last weeks post on shadow inventory, I came across a February story on how bankers let each other squat. It really...
Banksters should be held accountable for ruining the housing market and economy

OCHN: Era of pay-for-spin real estate news coverage is past

Struggling in the Internet era, newspapers increasingly rely on real estate advertisements for survival, corrupting the integrity of their coverage.

The Internet changed the way people stay informed. A single reporter can publish a story on the web, and millions of readers can access the...
Era of pay-for-spin real estate news coverage is past

Sunday, April 19, 2015

OCHN: The Fuld Touch: Everything he touches turns to crap

Just as Midas turned everything he touched to gold, Dick Fuld turns everything he touches to crap.

Guy Who Tanked Lehman Now Tanking a Malibu Golf Course
Friday, April 10, 2015, by Adrian Glick Kudler
In 2008, Dick Fuld was responsible for the largest bankruptcy filing in American history as...
The Fuld Touch: Everything he touches turns to crap

Friday, April 17, 2015

Debt Default: Buy now! They"re running of out land... on the moon

Most financial manias share a common belief that the supply of some precious resource is running out. The notion that they’re running of of land has sparked several financial manias. California has land booms and busts at various times in its history. Florida had a huge land boom and bust...
Buy now! They"re running of out land... on the moon

Housing Market: A lack of first-time homebuyers is a drag on the housing market

The foundation of any housing market is the first-time homebuyer. By definition, people buying their first home don’t have equity (free money) from a previous sale to extend their borrowing power. Without the activity of first-time homebuyers, those who own homes at the entry level...
A lack of first-time homebuyers is a drag on the housing market

OCHN: Is fashion a high priority in real estate sales?

If you were selecting a real estate agent to represent you, would the agent’s style matter more than their competence?

A very high percentage of people who use a real estate agent to buy or sell a home use the first agent they contact and don’t shop around. This fact is largely...
Is fashion a high priority in real estate sales?

Thursday, April 16, 2015

Real Estate Loan: Delinquent jumbo loans in Coastal California pollute bank balance sheets

The good news in the mainstream media is that delinquency rates are down year-over-year. Of course, they ignore the fact that delinquencies have flatlined since the settlement agreement in February 2012 because that fact doesn’t fit with their optimism bias. The delinquency rate is a...
Delinquent jumbo loans in Coastal California pollute bank balance sheets

OCHN: Denying short sales restricts inventory, reduces sales, inflates prices

When lenders deny short sales, it removes MLS inventory from the market and contributes to low sales volumes and inflated house prices.

I’ve mentioned many times that the housing market bottomed in early 2012 because lenders changed their policies toward delinquency and foreclosure, not...
Denying short sales restricts inventory, reduces sales, inflates prices

Wednesday, April 15, 2015

Housing Forecast: The California economy is dependent upon Ponzi borrowers

Ponzi borrowing and HELOC Abuse Most people fail to budget properly for unexpected expenses or expenses that do not occur monthly. When these expenses occur, most will borrow the money, often on credit cards. During the year, this debt will accumulate like tooth plaque, and at the end of the year...
The California economy is dependent upon Ponzi borrowers

Mortgage Refinance: The unceremonious fall from entitlement (redux)

The Great Housing Bubble cultivated a gentilityof entitlement, a sordid societal residue, a system of reliance, a conviction among people that they may possess anything they wish just because; deserving without earning; Grace. Divine acceptance is given; whereas, worldly possessions are earned...
The unceremonious fall from entitlement (redux)

OCHN: Stunning proof boomerang homebuyers do not exist

Data shows very few recent mortgage originations were from borrowers with a previous foreclosure.

Over the last several years, the financial media periodically runs stories about the return of boomerang buyers, those who lost their homes in foreclosure but bought again. From the beginning I...
Stunning proof boomerang homebuyers do not exist

Tuesday, April 14, 2015

Mortgage Foreclosure: Will rising taxes force housing over the fiscal cliff?

The Republicans under George Bush passed a series of tax cuts that are due to expire at the end of 2012. Republicans are making this a campaign issue by scaring voters with the specter of a “fiscal cliff.” Economists have stepped forward with varying but dire predictions of the end...
Will rising taxes force housing over the fiscal cliff?

OCHN: Would you trade future equity for HELOC money?

Lenders are willing to provide HELOC money requiring no payments until the time of sale if the borrower splits the remaining equity.

Are there any circumstances under which homebuyers would be willing to share in the upside of home price appreciation? I wrote about the concept of equity share...
Would you trade future equity for HELOC money?

Monday, April 13, 2015

USA Foreclosure: Perpetual shadow inventory extends housing downturn and creates uncertainty

The reports of declining shadow inventory are wrong. Since lenders slowed their processing of REO inventory, shadow inventory stopped getting any smaller. As CoreLogic noted in their recent report, “the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has...
Perpetual shadow inventory extends housing downturn and creates uncertainty