Larry Roberts real estate writing blog: November 2015

Monday, November 30, 2015

USA Foreclosure: Real estate"s high end is finally getting whacked in 2012

I believe the low end of the housing market is finding a bottom. Due to the timely processing of subprime foreclosures, prices crashed hard at the low end, and shadow inventory is much less abundant. Low interest rates and lower prices pushed affordability to record highs, and investor interest...
Real estate"s high end is finally getting whacked in 2012

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Renter News: How The Lending Cartel Disposes Their REO Will Determine the Market’s Fate

Many people believe the crash is over because removing the supply stabilized prices. Most people who carefully watch housing markets agree that a cartel of lenders controls the market through its ability to control supply. Since lenders are being permitted to hold non-performing loans on their...
How The Lending Cartel Disposes Their REO Will Determine the Market’s Fate

OCHN: People desire homeownership but fail to save for down payment

A large majority wants to own a house, but only a small minority is actually saving money to meet that objective.

The last line of defense for the housing bulls is the fallacy of pent-up demand. Belief in this fallacy relies on people’s inability to distinguish between desire and demand.
The f...
People desire homeownership but fail to save for down payment

Sunday, November 29, 2015

USA Housing: How lenders liquidate legacy loans will lift or lower house prices

The housing bust is over. Struggling borrowers found new high-paying jobs, cured their delinquent loans, and eliminated the temporary stress on the housing market brought about by the Great Recession. … Well, at least that’s what the mainstream media wants everyone to believe. If...
How lenders liquidate legacy loans will lift or lower house prices

Saturday, November 28, 2015

OCHN: San Bernardino County Housing Market Report: November 2015

Historically, properties in this market sell at a 25.7% discount. Today’s discount is 33.4%. This market is 7.8% undervalued.
Median home price is $280,400 with a rental parity value of $421,600. This market’s discount is $141,200.
Monthly payment affordability has been improving...
San Bernardino County Housing Market Report: November 2015

Real Estate Ruin: What California can learn from Britain"s housing bubbles

California and Great Britain have much in common with regards to its real estate. California has witnessed three catastrophic bubbles over the last forty years as has Great Britain. Each bubble had different causes, but the timing was similar. California has strict land-use controls which...
What California can learn from Britain"s housing bubbles

Friday, November 27, 2015

Debt Default: Renter"s guide to preparing for home ownership

I have been accused of being “old school” because I never embraced the innovations in real estate finance that inflated the housing bubble. In 2006 preparing for home ownership only required finding a house and signing a few loan documents. It’s a lot more difficult today.Now...
Renter"s guide to preparing for home ownership

Housing Market: Faith in home price appreciation is religion in California

Kool aid is flowing again. Last week, I read the following comment that encapsulates the religious faith of most Californians,
Besides, OC real estate has been and will continue to be desirable. It’s also very cyclical and I knew there would be another cycle coming much sooner than the bears p...
Faith in home price appreciation is religion in California

Thursday, November 26, 2015

Real Estate Loan: Ponzis want another chance at free mortgage money

The desire for home ownership is stronger than ever. There are many emotional reasons to covet home ownership, and these are valid reasons to buy a house. However, over the last 30 years, the desire to own a home for family and security has been darkened and twisted by the desire to make...
Ponzis want another chance at free mortgage money

OCHN: OC For sale inventories finally recovering

As predicted three years ago, now that house prices are near the peak, for-sale inventory is returning to the market.

Back in late 2012, I noted that Below-median home inventories may not recover for years. Here was my reasoning:
For home inventories to recover, sellers must come back to the...
OC For sale inventories finally recovering

Wednesday, November 25, 2015

Housing Forecast: California bank repossessions continue to plummet, squatters rejoice in 2012

Like any business, banks adjust their business plans quarterly based on both internal and external forces. Internally, banks respond their need for additional capital to fund operations. Externally, they cope with a declining housing market, recent regulatory changes, and new conditions imposed...
California bank repossessions continue to plummet, squatters rejoice in 2012

Mortgage Refinance: Real estate negotiation techniques (redux)

Negotiating the sale of residential real estate is no more difficult that negotiating for any other product of service that does not have a fixed price; however, due to the colossal cost of houses, the process is more important financially than negotiating for other big-ticket items like...
Real estate negotiation techniques (redux)

OCHN: I am thankful I am not homeless

he fear of homelessness is the essential motivation to get people to work to produce goods and services in our society.

Modern American culture can trace its roots on the North American continent to pioneering English settlers. Life on the frontier is harsh, and each family unit is...
I am thankful I am not homeless

Tuesday, November 24, 2015

Mortgage Foreclosure: realtors who are assholes sell more homes

Do people who lie, cheat, and steal always do better than the rest of us? Apparently in some professions they do. Obviously, in criminal professions, the people who get ahead are the ones most willing and able to violate the rules. In professions with shades of gray, and real estate sales has...
realtors who are assholes sell more homes

OCHN: House poor: when the house fails as an investment

Paying too much for a house can leave the family with too little disposable income to satisfy other desires or meet important family obligations.

Housing is often touted as an investment you can live in. The dual purpose nature provides twice the utility, so people feel comfortable paying twice...
House poor: when the house fails as an investment

Monday, November 23, 2015

USA Foreclosure: 2.7 million California households pay at least half their income for housing in 2012

One hundred percent of those who lost homes in foreclosure suffered from excessive debt — 100%. The total amount of debt is important, but the terms of repayment are far more critical. The monthly payment (plus taxes, insurance and other costs) must be a manageable percentage of the...
2.7 million California households pay at least half their income for housing in 2012

OCHN: 85% of good borrowers with low FICO scores will never get a mortgage

Lenders must deny mortgages to good borrowers to prevent too many deadbeats from getting mortgages and destabilizing the housing market.

Environment is stronger than will power. — Paramahansa Yogananda

When you were in high school, did your parents ever caution you about the company you...
85% of good borrowers with low FICO scores will never get a mortgage

Sunday, November 22, 2015

USA Housing: Can education overcome kool-aid intoxication and realtor bullshit?

Most people believe what they want to believe. Religious faith is as old as civilization, and faith in home price appreciation is religion in California. Religious faith is great for people looking for peace of mind in a chaotic world, but it doesn’t apply well to investments. People who...
Can education overcome kool-aid intoxication and realtor bullshit?

Saturday, November 21, 2015

Real Estate Ruin: The new normal in housing: cheaper to own than to rent

Californian’s believe it’s supposed to cost more to own an home than to rent one. It’s one of the biggest misconceptions in real estate. It’s so deeply engrained that even the so-called experts don’t question it. Renting is supposed to be more expensive than owning....
The new normal in housing: cheaper to own than to rent

Friday, November 20, 2015

OCHN: What’s different about the latest housing bubble?

Housing bubble 2.0 is built on stable, fixed-rate mortgages applied to verified wages rather than unstable affordability products applied to borrower lies.

The Great Housing Bubble of the 00s was inflated by mortgage affordability products such as option ARMs that allowed borrowers to obtain...
What’s different about the latest housing bubble?

Housing Market: Did stopping HELOC abuse kill the economy?

Economists are busy studying the “wealth effect” to determine how important it is to the country’s economic health. Unfortunately, they don’t really understand the mechanics behind what they are studying. The basic assumption economists make is the people spend more of...
Did stopping HELOC abuse kill the economy?

Thursday, November 19, 2015

Real Estate Loan: Future housing markets will be very interest rate sensitive

Economists who focus on larger trends, the so-called macro-economists, have rightly pointed out that housing markets in the past haven’t been very sensitive to fluctuations in interest rates. For example, during the 1970s, interest rates rose significantly, which should have caused house...
Future housing markets will be very interest rate sensitive

OCHN: Celebration of FHA solvency premature

The FHA traded in a viable long-term income stream for some short-term refinance revenue creating potential for future shortfalls to the fund.

Supporters of HUD Secretary Julián Castro, a potential VP running mate, gloated over the recent news that the FHA insurance fund swelled to reach ...
Celebration of FHA solvency premature

Wednesday, November 18, 2015

Housing Forecast: California downgraded loan owners, diverted bank extortion booty to others

Many loan owners made mortgage payments over the last few years when they would have benefited more from strategic default. Many of those loan owners were motivated by the false hope of a government bailout bringing principal reduction or other goodies. California led these sheeple down the path...
California downgraded loan owners, diverted bank extortion booty to others

Mortgage Refinance: Can you name all the bailouts to banks, homeowners, and government sponsored enterprises? It"s many more than you think

Last week I published a post that predicted that the Federal Reserve will start bailouts by performing principal reductions for underwater homeowners. I wanted to detail exactly how did we reach that stage. So, I wanted to briefly detail the last five years of housing bailouts. It was just an ...
Can you name all the bailouts to banks, homeowners, and government sponsored enterprises? It"s many more than you think

OCHN: Orange County housing will never be cheap again

The conditions that caused house prices to crash far below fundamental values will likely never happen again.

During the 00s house prices rose far above any justifiable fundamental value juiced by affordability products. When these products proved unstable, millions of delinquencies and...
Orange County housing will never be cheap again

Tuesday, November 17, 2015

OCHN: What happened to all the real estate blogs?

At the height of the housing bubble hundreds of bloggers wrote about the real estate market, but over time, the genre has almost completely disappeared.

The 00s were the golden age of real estate blogging. Many people from all walks of life realized house prices were a real estate bubble, and...
What happened to all the real estate blogs?

Monday, November 16, 2015

USA Foreclosure: Rising home values halted strategic default

Just as buying a home is an emotional decision, defaulting on the mortgage and giving up a home is too. Any borrower who is deeply underwater and making payments in excess of a comparable rental would benefit financially from strategic default. That’s the math. However, defying the logic,...
Rising home values halted strategic default

Renter News: Squatting Among the Rich and Famous

I recently wrote that squatting is becoming a way of life for many delinquent borrowers. Of course, this doesn’t meet the technical definition of squatting which is possession of real estate without the owner’s permission. In this instance, the squatters are technically still the o...
Squatting Among the Rich and Famous

OCHN: Could rising interest rates stimulate the economy?

Rising interest rates would put money into the hands of savers, particularly seniors, who will spend it on goods and services and stimulate economic growth.

Last week I wrote about interest rates. In the post Will Janet Yellen capitulate to greedy bankers and raise interest rates?, I lampooned...
Could rising interest rates stimulate the economy?

Saturday, November 14, 2015

OCHN: Los Angeles County Housing Market Report: November 2015

Historically, properties in this market sell at a 9.5% discount. Today’s discount is 13.7%. This market is 4.1% undervalued.
Median home price is $509,200 with a rental parity value of $593,600. This market’s discount is $84,400.
Monthly payment affordability has been improving over...
Los Angeles County Housing Market Report: November 2015

Real Estate Ruin: Principal reduction transfers the pain from lenders and loan owners to everyone else

I have two strongly held views on foreclosure and principal reduction that are completely at odds with the drivel in the mainstream media. First, foreclosures are not a problem. In fact, foreclosures are essential to the economic recovery. All efforts to avoid or delay foreclosures are...
Principal reduction transfers the pain from lenders and loan owners to everyone else

Friday, November 13, 2015

Debt Default: With house prices rising, the value of lots and raw land skyrockets

The valuation of land used for residential housing is mysterious and often misunderstood. The valuation of lots and raw land requires a detailed knowledge of construction and marketing costs as well as a good estimate of the sales price of the final product: a residential housing unit. In short,...
With house prices rising, the value of lots and raw land skyrockets

Housing Market: Low MLS inventory a boon to homebuilders

Yesterday, in the post Can the Fed reflate the housing bubble without negative side effects?, I discussed the various market distortions resulting from the federal reserve’s zero-interest-rate policy. The inflated asset values are byproducts of the fed’s actions, but with respect to...
Low MLS inventory a boon to homebuilders

OCHN: GSEs prepare to can-kick bad loans again as loan modifications reset

Previous loan modifications and old HELOCs face reseting to higher rates and recasting to full amortization likely leading to further loan modification.

Lenders don’t want to modify loans. They would far rather have the borrower pay in accordance with the promissory note they both signed when t...
GSEs prepare to can-kick bad loans again as loan modifications reset

Thursday, November 12, 2015

Real Estate Loan: Two recent bank bailouts and another on the way in 2013

The banks are stealing your money… again. The US Government and the federal reserve spent billions bailing out the banking system in 2008 from a financial crisis created by foolish lending. Commercial banks and Wall street securitizers pumped trillions of dollars into dodgy mortgages, much...
Two recent bank bailouts and another on the way in 2013

OCHN: OC new home sales crater due to high prices

New home prices are too high in Orange County. There are not enough buyers with the ability and the desire to buy to absorb the inventory.

Is Orange County, California, in the grips of a new housing bubble?
No, but the prices are too damn high.
This isn’t rocket science, and I don’t...
OC new home sales crater due to high prices

Wednesday, November 11, 2015

Housing Forecast: Strategic default paid off as defaulters repurchased at lower prices

Many borrowers chose not to struggle with onerous house payments early in the housing bust and strategically defaulted. Most of these borrowers recognized their payments were greater than the cost of a comparable rental, and with falling prices, there was no return for this added investment. The...
Strategic default paid off as defaulters repurchased at lower prices