Larry Roberts real estate writing blog: July 2015

Friday, July 31, 2015

Debt Default: How likely is a sudden rise in mortgage rates?

Ben Bernanke, chairman of the federal reserve, has pledged to keep interest rates low through 2015 to instill investor confidence. However, there is dissention at the federal reserve, and Bernanke will likely not be reappointed in 2014 at the end of his term, so federal reserve policy could...
How likely is a sudden rise in mortgage rates?

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Thursday, July 30, 2015

Real Estate Loan: Sometimes real estate is a ball and chain

Banks have been allowing delinquent mortgage holders to squat while prices rebound because rising prices allows them to recover more on their bad loans. In many cases, the delinquent borrower moves on with their lives and leaves the property vacant with the assumption that the bank will finally...
Sometimes real estate is a ball and chain

OCHN: Should policymakers curtail Section 8 housing benefits?

Government subsidy programs promote dependency, and they are expensive, but they provide a service needed by millions of people to alleviate poverty.

In a frontier society, there are no bailouts. Life on the frontier is harsh, and each family unit is self-reliant. In a frontier society, if...
Should policymakers curtail Section 8 housing benefits?

Wednesday, July 29, 2015

Housing Forecast: 8.7 years to clear Orange County distressed inventory at stable liquidation rate

Lenders are withholding inventory across the Southwestern United States in hopes of creating a shortage of supply to reverse the downward spiral in home prices. Lenders constantly try to balance two competing forces. First, lenders need to get their money back. Dead money tied up in...
8.7 years to clear Orange County distressed inventory at stable liquidation rate

Mortgage Refinance: Will the high cost of FHA financing derail the housing recovery?

First-time homebuyers are the foundation of the housing market. Move-up buyers need first-time homebuyers to purchase their property to provide the equity to make the move up possible. With the collapse of toxic loan products from the bubble, first-time homebuyers suddenly needed to have...
Will the high cost of FHA financing derail the housing recovery?

OCHN: Investing in San Bernardino: opportunity or disaster?

Properties in distressed communities surrounded by strong demand for real estate often provide opportunities for investors betting on an economic recovery.

Distressed property investing is both a science and an art. Finding a distressed property market is not difficult, and anyone who...
Investing in San Bernardino: opportunity or disaster?

Tuesday, July 28, 2015

Mortgage Foreclosure: Allowing delinquent mortgage squatting caused more strategic defaults than crashing prices

Ever since the housing bust began, banks have been caught between a rock and a hard place. On one side, if they foreclose and liquidate their inventory, prices plummet which prompts underwater borrowers to strategically default. The downward spiral of strategic default is in clear evidence in...
Allowing delinquent mortgage squatting caused more strategic defaults than crashing prices

Renter News: Which bubble era cities will crumble to dust?

When the housing bubble burst, it was the worst of time for loan owners and speculators, and it was the best of times for buyers and cashflow investors. Some cities and regions have dropped precipitously, and to the degree these areas were dependent upon homebuilding and construction is the...
Which bubble era cities will crumble to dust?

OCHN: Why are condo prices so volatile?

Condo prices remain low until better alternatives are removed from the market and people are forced to compete for lower quality digs.

Condo prices are notoriously volatile, far more volatile than house prices. But why is that? Is it because nobody wants to live in a condo? There’s...
Why are condo prices so volatile?

Monday, July 27, 2015

USA Foreclosure: Investors buying REO crippled the move-up market

Prices crashed in 2007 and 2008 down to levels of relative affordability due to shrinking loan balances from the withdrawal of toxic loan products. Each of the loan owners who used unstable loans lost their houses and their creditworthiness. As a result, millions of foreclosures hit the market...
Investors buying REO crippled the move-up market

OCHN: REO-to-rental companies helped many former owners stay in their homes

REO-to-rental companies enabled many foreclosed former owners to remain in their homes with lower monthly payments, a genuinely positive outcome.

When I went out to Las Vegas to buy houses, the banks were feverishly foreclosing and selling properties for whatever they could get. The discounts...
REO-to-rental companies helped many former owners stay in their homes

Sunday, July 26, 2015

USA Housing: Moral hazard is central issue in housing bust (redux)

Many issues compete for our attention in the wake of the housing bust. However, the importance of these issues is not equal. Underlying most of them is the central problem of the housing bust: moral hazard. Every decision we make in life has consequences. If we save regularly and invest wisely,...
Moral hazard is central issue in housing bust (redux)

Saturday, July 25, 2015

Real Estate Ruin: America Underwater

The housing bubble has many lessons to teach us. I have written on the subject for five years now in hopes that people can learn from the successes and failures of those impacted by the housing bubble. Someone recently posted a link in the thoughtful remarks to a website devoted to those who are...
America Underwater

Friday, July 24, 2015

Debt Default: Obama urges lenders to make bad loans to irresponsible borrowers at taxpayer expense

“Those who cannot learn from history are doomed to repeat it.” George Santayana “What experience and history teach is this – that people and governments never have learned anything from history, or acted on principles deduced from it.” G. W. F. Hegel The causes of...
Obama urges lenders to make bad loans to irresponsible borrowers at taxpayer expense

OCHN: Stable cashflow is key to stress-free retirement

Peace-of-mind in retirement is attainable, affordable, and priceless. Stable income streams do more for us emotionally than does a large but shrinking pile of money.

We are all born needing a lifetime of cashflow to meet our needs and wants. Except those lucky few born to parents who provide a...
Stable cashflow is key to stress-free retirement

Thursday, July 23, 2015

Real Estate Loan: Should the government back new subprime mortgages?

The government needs to get out of housing finance. The losses at the GSEs apporach $150 billion, and the FHA needs its own bailout. These are losses all of us who didn’t participate in the madness get to pay. And as long as the government continues to back 90% or more of loans for...
Should the government back new subprime mortgages?

OCHN: National home prices reach housing bubble peak nine years later

Restoring peak housing prices required record low mortgage rates during a period of weak growth and a falling home ownership rate.

It’s time to celebrate! National home prices reached the peak of 2006. Surviving homedebtors are regaining equity, surviving lenders have collateral backing...
National home prices reach housing bubble peak nine years later

Wednesday, July 22, 2015

Housing Forecast: OC Housing Market Newsletter for April 2012

Each month I publish the OC Housing Market Newsletter below and send it to subscribers. A few weeks later, I publish in on the blog. To get the most timely data, please sign up below. The data in this report will help you identify which cities, zip codes or communities with the best pricing. You...
OC Housing Market Newsletter for April 2012

Mortgage Refinance: Kicking widows to the curb, the sad fallout of excessive senior debt

My point of view on home ownership and debt is very different than most financial reporters, and apparently it’s different than most Americans. In my view traditional views of home ownership, like those extolled in Mike’s weekend piece Why our less educated parents and grandparents...
Kicking widows to the curb, the sad fallout of excessive senior debt

OCHN: Dodd-Frank vastly improves the mortgage lending market

Dodd-Frank effectively regulates the mortgage market and greatly restricts the proliferation of unstable loan products that harm both borrowers and lenders.

In the post, Dodd-Frank prevents lenders from inflating another bubble, I detailed the impact Dodd-Frank had on the housing market. Today,...
Dodd-Frank vastly improves the mortgage lending market

Tuesday, July 21, 2015

Mortgage Foreclosure: Housing recovery in question as California home sales fall

Recently I wrote that a durable recovery would be demand driven, not supported by restricted supply. Reductions in supply may temporarily force house prices higher, but a sustained recovery requires higher prices and higher sales volumes. In other words, a durable recovery requires a resurgence...
Housing recovery in question as California home sales fall

Renter News: Lenders are responsible for the bad borrowers they create

Banks created their own nightmare. They turned good borrowers into HELOC dependent Ponzis, inflated a massive housing bubble, and now that prices are crashing, lenders are surprised at the behavior of borrowers. Each side feels they are being victimized by the other. Lenders are being left to...
Lenders are responsible for the bad borrowers they create

OCHN: Accelerate loan amortization to pay off mortgage debt quickly

Paying off a promissory note early removes the mortgage encumbrance and turns a real estate borrower into a property owner.

Most people realize their dreams of home ownership when they borrow hundreds of thousands of dollars to purchase a house. This is not ownership; it is debt slavery. People...
Accelerate loan amortization to pay off mortgage debt quickly

Monday, July 20, 2015

USA Foreclosure: Eminent domain of mortgages can deter future housing bubbles

The latest false-hope-for-loanowners news story is San Bernardino County’s idea of using eminent domain to foreclose on mortgages. The idea is completely untenable, and it will not come to pass, but many loanowners hoping for principal reduction are latching on to this “hail...
Eminent domain of mortgages can deter future housing bubbles

OCHN: The conforming mortgage loan limit should NOT be raised

Raising the conforming loan limit encourages affluent borrowers to buy expensive homes, the opposite of what lawmakers intended when the subsidies began.

In order to spur lending to lower and middle income Americans, the GSEs and FHA provide loan guarantees to mortgage loans under the...
The conforming mortgage loan limit should NOT be raised

Sunday, July 19, 2015

USA Housing: A weak plea for more housing subsidies

I am a supporter of home ownership — not loan ownership as it’s become perverted into — but real home ownership free of encumbrances like a hefty mortgage. Most people who achieve home ownership go through a period of indebtedness because few can save enough (or get gifts from...
A weak plea for more housing subsidies

Saturday, July 18, 2015

Real Estate Ruin: Excessive student loan debt is another long-term drag on housing

When subprime borrowers defaulted and lenders foreclosed, the bottom fell out of the housing market. As the distress from toxic mortgage debt worked its way up the housing ladder, each subsequent rung collapsed. Only the upper tiers remain inflated, although probably not for much longer. With...
Excessive student loan debt is another long-term drag on housing

Friday, July 17, 2015

Debt Default: Loanowners are speculating their newly found equity in the stock market

This is a window inside the mindset of the 21st century ponzi loanowner. This is the worst recession in post war history, and home owners that lucky to now have equity in their properties are taking it and gambling in the stock market. Is paying down your mortgage such terrible financial act t...
Loanowners are speculating their newly found equity in the stock market

Housing Market: Will the deflating bond bubble cause housing to crash again?

With as difficult as it is to predict interest rates, why are people so sure interest rates will go up? Well, the basis of all interest rates is the federal funds rate controlled directly by the federal reserve. This rate is not just at a historic low, it’s at zero. It can’t go any...
Will the deflating bond bubble cause housing to crash again?

Thursday, July 16, 2015

Real Estate Loan: Will the reflating housing bubble also burst?

Few deny that we are reflating the housing bubble. Most use the comforting euphemism “recovery,” but this is not semantically correct. The housing bubble was characterized by an unprecedented detachment from fundamental values. The deflation of the housing bubble was the recovery....
Will the reflating housing bubble also burst?

OCHN: No college education means no house in Coastal California

Lower wage earners, including most who don’t graduate college, may never earn enough to save for a down payment to own a house in California.

When I first wrote about the housing bubble back in 2007, I argued forcefully that it was not possible for everyone to get priced out of the real...
No college education means no house in Coastal California

Wednesday, July 15, 2015

Housing Forecast: As lenders withhold product, the homebuilders flourish

Anyone who watches the market carefully knows that lenders are withholding supply to cause prices to bottom. This is in the best interest of the members of the banking cartel. It’s surprising to me they managed to pull it off. Cartels are inherently unstable, most often because each member...
As lenders withhold product, the homebuilders flourish

Mortgage Refinance: Why our less educated parents and grandparents were more intelligent on homeownership

Many of the Generation X (me) and most of the Baby Boomers where sons or daughters of parents that their highest level of eduction was high school. In fact none of my grandparents completed high school. In contrast, the baby boomers attended college in record numbers leading to explosion in the ...
Why our less educated parents and grandparents were more intelligent on homeownership

OCHN: How to calculate real estate investment returns

The three main measures of financial performance for rental real estate are capitalization rate, cash-on-cash return, and internal rate of return.

When people buy a personal residence, they often solace themselves that the high prices is warranted because the property is a good investment....
How to calculate real estate investment returns

Tuesday, July 14, 2015

Renter News: Panel finds Greenspan and Bernanke responsible and negligent

Nobody is perfect. Everybody plays the fool sometimes. We hope we put people in positions of power who know what they are doing. Sometimes, these people fail, and when they do millions suffer for their arrogance and their ignorance. The sad conclusion of the government commission on the...
Panel finds Greenspan and Bernanke responsible and negligent