Larry Roberts real estate writing blog: December 2015

Thursday, December 31, 2015

Real Estate Loan: 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

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OCHN: Median as market price measurement

There is no perfect measure for any broad financial market activity. Markets for stocks, bonds and other securities are the most widely reported and measured financial markets. It is relatively easy to measure activity in these markets because all sales are recorded at a few central exchanges...
Median as market price measurement

Wednesday, December 30, 2015

Housing Forecast: Top ten ways to protect taxpayers against Ponzi mortgage theft

How do we taxpayers protect ourselves against Ponzi mortgage theft? Prior to the collapse of the housing bubble, when lenders gave free money to loan owners, it was theirs to give — and to lose. But when the losses overwhelmed our banking system, the government took conservatorship of the...
Top ten ways to protect taxpayers against Ponzi mortgage theft

OCHN: Psychological stages of a financial bubble

Psychological Stages of a Bubble
Once a bubble starts to form, it will go through several identifiable stages: enthusiasm, greed, denial, fear, capitulation, and despair. Each of these stages is characterized by different speculator emotional states and different resulting behaviors. There are...
Psychological stages of a financial bubble

Tuesday, December 29, 2015

Mortgage Foreclosure: Southern California"s cultural pathology (redux)

I began writing about the housing market back in February of 2007. Over the last five and one half years, I’ve covered a lot of ground. Many of my earliest posts serve as a foundation for my philosophy that comes through my daily posts. I know many of you who read this blog have been with...
Southern California"s cultural pathology (redux)

OCHN: Why Donald Trump will be the next President of the United States

The populist revolt brewing is stronger than most realize, and Donald Trump taps into this populist anger better than any other candidate.

This isn’t a political blog, and I don’t want it to become one.
That being said, after watching The Big Short yesterday, I had an epiphany:...
Why Donald Trump will be the next President of the United States

Monday, December 28, 2015

USA Foreclosure: Conventional wisdom wrong, foreclosures don"t reduce neighborhood values

Conventional wisdom is that foreclosures reduce neighborhood values. It turns out, that isn’t the case. It’s easy to see why people come to this erroneous conclusion. Properties that go through foreclosure often sell for less than recent comparable sales, particularly after the peak...
Conventional wisdom wrong, foreclosures don"t reduce neighborhood values

Renter News: Government Robs Working Renters to Subsidize Unemployed Homedebtors

With election season gearing up, politicians are seeing what voter groups they can buy off. Apparently, the unemployed homedebtors are a significant voter block this time around. U.S. Plans More Aid for Jobless Homeowners By DAVID STREITFELD Published: August 11, 2010 In an acknowledgment that t...
Government Robs Working Renters to Subsidize Unemployed Homedebtors

OCHN: FHA financing and loan assumption (update)

When the FHA cut their insurance fees in half in early 2015, using FHA loans to obtain the benefits of loan assumption became a better option.

This post contains specific advice that in the future will either help you sell your house faster and easier or for more money.
Utilize fixed-rate a...
FHA financing and loan assumption (update)

Sunday, December 27, 2015

OCHN: San Bernardino County Housing Market Report: December 2015

Historically, properties in this market sell at a 25.7% discount. Today’s discount is 33.0%. This market is 7.3% undervalued.
Median home price is $280,000 with a rental parity value of $412,000. This market’s discount is $132,000.
Monthly payment affordability has been improving...
San Bernardino County Housing Market Report: December 2015

USA Housing: Mounting evidence of housing market"s extreme sensitivity to mortgage interest rates

In February I made the case that future housing markets will be very interest rate sensitive. When you look at the mechanisms used to inflate previous bubbles — using teaser rates, allowing excessive DTIs, and abandoning amortization — these were banned by the new residential mortgage rules. Len...
Mounting evidence of housing market"s extreme sensitivity to mortgage interest rates

Saturday, December 26, 2015

OCHN: Riverside County Housing Market Report: December 2015

Historically, properties in this market sell at a 18.5% discount. Today’s discount is 23.9%. This market is 5.4% undervalued.
Median home price is $305,000 with a rental parity value of $398,300. This market’s discount is $93,300.
Monthly payment affordability has been improving over...
Riverside County Housing Market Report: December 2015

Real Estate Ruin: Distressed sales cannot be excluded when analyzing the market

A common meme in the realtor community is that distressed sales, REO and short sales, are somehow not part of the market. It’s a common misconception shared by agents, sellers, and some misguided housing market analysts.This idea emanates from the desire to see prices rise. Every seller...
Distressed sales cannot be excluded when analyzing the market

Friday, December 25, 2015

OCHN: Foreclosure 101: mechanics of a trustee sale

Why Trustee Sales?
Most buy at Trustee Sales to make or save money. When compared to resale properties, Trustee Sales are generally discounted between 10% and 20% and sometimes the discounts are even greater. The first post in this series featured a property being flipped for a 25% gain, a...
Foreclosure 101: mechanics of a trustee sale

Debt Default: Do pocket listings enrich realtors at the seller"s expense?

A pocket listing is a property kept off the MLS for exclusive showing to select buyers. Most often pocket listings are used by agents who want to double-end the deal and make double the commission. In that scenario, the agent is ignoring the inherent conflict of interest in dual agency to make...
Do pocket listings enrich realtors at the seller"s expense?

Housing Market: 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

Thursday, December 24, 2015

Real Estate Loan: 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: Foreclosure 101: non-judicial foreclosure

Judicial or Non-Judicial Foreclosure
Foreclosure proceedings in most states are either Judicial or Non-Judicial at lender’s discretion. Unlike mortgages, Trust Deeds give the lender the Power of Sale at public auction if the borrower fails to repay the debt. With a Trust Deed, a lender can e...
Foreclosure 101: non-judicial foreclosure

Wednesday, December 23, 2015

Housing Forecast: Is the banking cartel in violation of the Sherman Antitrust Act?

Unfettered capitalism has its drawbacks. The two most notable among them are key issues in the housing bubble and bust: Ponzi schemes, and monopoly price fixing. Ponzi schemes are destructive because they create artificial demand for goods and services based on unsustainable growth in investment...
Is the banking cartel in violation of the Sherman Antitrust Act?

Mortgage Refinance: Accelerated default, what strategic default really is (redux)

People form strong attachments to their homes. Walking away is never a decision they take lightly. We can discuss the pros and cons and come up with our own beliefs and attitudes about it, but the turnover of our housing stock caused by the housing crash will be very painful for those who go...
Accelerated default, what strategic default really is (redux)

OCHN: Foreclosure 101: vesting title

The next three days get a little wonkish. Prepare for a primer on foreclosures.

Ownership is primal. The first two words children learn in any language are “no” and “mine.” People have an deep intuition of what is theirs and what is not. Emotionally, It’s Mine defines ownership; in the real worl...
Foreclosure 101: vesting title

Tuesday, December 22, 2015

Mortgage Foreclosure: Restricting MLS inventory is reviving homebuilding

Homebuilding usually leads the economy out of recession. The Great Recession did not end with a building boom largely because of overbuilding during the housing bubble. A false price signal triggered excessive homebuilding, and it took five years to work off the inventories. The collapse of the...
Restricting MLS inventory is reviving homebuilding

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

Many people truly don’t understand by helping “struggling borrowers” was a bad idea. It was. It encourages even more risk taking.

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...
Moral hazard is central issue in housing bust (redux)

Monday, December 21, 2015

USA Foreclosure: What will bring new for-sale inventory to the housing market in 2012?

With the serious problems facing the housing market including high delinquency rates creating a massive shadow inventory, a weak economy, tepid demand from owner-occupants, excessive consumer debt, a depleted buyer pool due to credit impairment, and artificially low interest rates, it’s a...
What will bring new for-sale inventory to the housing market in 2012?

Renter News: The Policy of Screwing Prudent Renters to Benefit Loan Owners

One housing bubble phenomenon was that the right ones — prudent people who knew what they could afford — were kept out, and the wrong ones — kool aid intoxicated fools — were let in. That mistake was bad enough, but now our own government is frantically working to repeat t...
The Policy of Screwing Prudent Renters to Benefit Loan Owners

OCHN: The Unceremonious Fall from Entitlement (redux)

Of all the posts I’ve written over the last nine years, this is one of those I am most proud of.

The Great Housing Bubble cultivated a gentility of entitlement, a sordid societal residue, a system of reliance, a conviction among people that they may possess anything they wish just...
The Unceremonious Fall from Entitlement (redux)

Sunday, December 20, 2015

OCHN: Los Angeles County Housing Market Report: December 2015

Historically, properties in this market sell at a 9.5% discount. Today’s discount is 14.4%. This market is 4.9% undervalued.
Median home price is $505,600 with a rental parity value of $590,700. This market’s discount is $85,100.
Monthly payment affordability has been improving over...
Los Angeles County Housing Market Report: December 2015

USA Housing: Coastal California real estate least affordable in the nation

Everyone wants to live in Coastal California, so we are running out of land. Prices are supported by fundamentals, and it’s different this time. Prices are rising rapidly, so you better buy now, or you will be priced out forever. Does any of that nonsense sound familiar? Each of those made...
Coastal California real estate least affordable in the nation

Saturday, December 19, 2015

Real Estate Ruin: Is it time to formally make “Single Asset Real Estate” entities ineligible to file for bankruptcy?

Have you ever come across some really in-depth writing on involved topics on the internet? It’s pretty rare. I try my best at the OCHN to give a greater level of depth than what people find in the mainstream media, but there are others out there who take it to another level entirely. Last...
Is it time to formally make “Single Asset Real Estate” entities ineligible to file for bankruptcy?

OCHN: Top Ten Points about Star Wars: The Force Awakens

I was fortunate enough to watch this film at 10:30 AM opening day. I thoroughly enjoyed this movie, and I will likely watch it two or three more times during the holidays.
First, be careful you don’t read too much about this film because someone will probably spoil it for you. There are d...
Top Ten Points about Star Wars: The Force Awakens

Friday, December 18, 2015

Debt Default: Americans are increasingly foolish with debt

After 30 years of falling interest rates, Americans have become addicted to cheap credit and personal Ponzi schemes. People have learned they can take on large debts, consolidate them at lower and lower interest rates, and service that debt with a portion of their income. It’s a bit like...
Americans are increasingly foolish with debt

Housing Market: With house prices rising, the value of lots and raw land is skyrocketing

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 is skyrocketing

OCHN: How the federal reserve keeps mortgage rates low

The federal reserve finally raised the federal funds rate 1/4 point on Wednesday, December 16, 2015. However, their oft-forgotten policy of buying mortgage-backed securities is actually far more meaningful to mortgage rates.

The monthly housing market reports I publish each month became bullish...
How the federal reserve keeps mortgage rates low

Thursday, December 17, 2015

OCHN: Paternalism from the CFPB is a welcome force for stable house prices

We need strong regulations in mortgage lending to prevent a repeat of the housing bubble and subsequent crash.

The financial elite in the United States hat the Consumer Financial Protection Bureau (CFPB) because the CFPB stands in opposition to those who want to rape and pillage the...
Paternalism from the CFPB is a welcome force for stable house prices

Real Estate Loan: The State of California does not like your house

The State of California now has a policy albeit an unofficial one to curb suburb growth, which will impact homeowners’ choices and lifestyles. At one point it was what car you drove in SoCal as the key status symbol, but I think it’s turned into where you live and the upgrades to...
The State of California does not like your house

Wednesday, December 16, 2015

Housing Forecast: Mortgage interest rates setting record lows week after week in 2012

Lenders are intent on maintaining inflated house prices to avoid write downs on their mortgage loans. Since prices are inflated, they only way they can sustain them is to make borrowing so inexpensive that the large sums required to buy a home are relatively affordable. Hence, we have lower and...
Mortgage interest rates setting record lows week after week in 2012

Mortgage Refinance: The folly of negative-cashflow investment (redux)

Real estate investors during the housing bubble put their money to work on faith. There is no logical reason to believe house prices only go up. In fact, there have been two prior periods in California’s recent history where house prices did, in fact, go down. However, with kool aid...
The folly of negative-cashflow investment (redux)

OCHN: What if interest rates remain low for a very long time?

If mortgage rates remain low, home sales will strengthen and house prices will keep going up.

There is much angst among potential homebuyers about rapidly rising prices and the potential for another housing bubble. The cheerleaders in the mainstream media are keen to squelch these concerns, and...
What if interest rates remain low for a very long time?

Tuesday, December 15, 2015

OCHN: Bold California housing market predictions for 2016

House prices and sales in 2016 depend almost entirely on what happens with mortgage interest rates

“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”
Lao Tzu

Each year I like to make a real market forecast. I try to examine current...
Bold California housing market predictions for 2016

Mortgage Foreclosure: Ravings of an entitled whiner struggling to keep a house she can"t afford

The housing bust is littered with sob stories about people losing their family homes. As I noted Responsible Homeowners are NOT Losing Their Homes. To see the truth in this statement, one needs to have a clear definition of “responsible homeowner.” A “responsible homeowner” is a buyer who, if the...
Ravings of an entitled whiner struggling to keep a house she can"t afford