Small-town America was left behind

The industrial midwest did not participate in the growth of the last 40 years.

Once in a while, I wonder what life would have been like if I stayed in my small hometown in Wisconsin. Members of my extended family and friends from school still live there, and I generally visit every year, so I ...

Small-town America was left behind

House prices may never reach the inflation-adjusted peak from 2006

House prices exceeded the 2006 housing bubble peak in 2016, but when adjusted for inflation, house prices may never reach that benchmark.

The NASDAQ recently surpassed the tech bubble high from 2000. Anyone who bought the index in March of 2000 could finally sell their holdings without losing...

House prices may never reach the inflation-adjusted peak from 2006

California creates many jobs but builds few houses

California creates more jobs than houses, so people leave the state for cheaper housing.

In the early 1970s, California began restricting new development. At first, it wasn’t a problem, but when California voters later passed Proposition 13, they made residential real estate much less...

California creates many jobs but builds few houses

Potential homebuyers respond negatively to higher mortgage rates

About 25% of potential homebuyers react with foolish urgency, but nearly half respond by either substituting down in quality, delaying their purchase, or canceling it altogether.

The national association of realtors is notorious for spinning data to support a false narrative the instills...

Potential homebuyers respond negatively to higher mortgage rates

Subprime loans are a government subsidized entitlement

Should everyone really own a house? Are renters so much less a part of their communities that the government must spend billions of dollars subsidizing home ownership?
These are important questions. How we answer them will guide how we remake our housing finance system which was destroyed with...

Subprime loans are a government subsidized entitlement

An entire generation of homebuyers went missing

The housing bubble pulled forward a generation of buyers; the housing bust cost these buyers their homes and their good credit, removing many of them permanently from the housing market.

Lenders succeeded in manipulating market prices by restricting supply; however, for a true recovery in...

An entire generation of homebuyers went missing

Removing distressed house supply facilitated the economic recovery

Removing the supply of distressed homes created a supply shortage homebuilders responded to by providing more houses, hiring construction workers, and stimulating the economy.


If I understand Keynesian theory properly — which is important to understand federal reserve policy — inflating asset v...

Removing distressed house supply facilitated the economic recovery

The two main reasons higher interest rates will hurt housing

Higher interest rates reduce housing demand by causing mortgage applications to decline, reducing loan balances, harming employment, and suppressing wages.

The federal reserve establishes interest rate policy, and for six years, the federal reserve held the benchmark federal funds rate to zero...

The two main reasons higher interest rates will hurt housing

Should fear of a housing bust prevent people from buying homes?

Rather than react with excitement and increased urgency, potential homebuyers fear rapidly rising home prices signal a new housing bubble. Does it?

California endured three large housing bubbles since the early 1970s. Each one was kicked off by a huge house price rally, inflating prices well...

Should fear of a housing bust prevent people from buying homes?

Can lenders loosen credit standards without inflating another housing bubble?

Lenders lower standards to qualify more borrowers and increase business, a precursor to another bubble, but only if risk is again mispriced.

The recipe for a housing bubble includes many ingredients such as loose lending standards. However, loose standards merely qualify more borrowers. While ...

Can lenders loosen credit standards without inflating another housing bubble?

Homebuilders love Donald Trump

Homebuilder confidence rose the most on record last month entirely due to the election of Donald Trump.

I spent most of the last four months meeting with homebuilders. The people in my office spend most of their time dealing with homebuilders. As a group, we interact with all of them, so we ...

Homebuilders love Donald Trump

California legislators want solar panels far more than they want houses

Forcing communities to accept housing like we force them to accept solar panels could solve California’s housing crisis.

Actions speak louder than words. Politicians pontificate on many issues, and they pander to their constituents to gain reelection. However, the laws they pass reflect...

California legislators want solar panels far more than they want houses

Housing is one of the least efficient markets

Due to a high rate of amateur participation and a lack of accurate information, housing markets are among the least efficient in the financial world.

The efficient markets theory postulates that speculative asset prices always incorporate the best information about fundamental values. Adherents...

Housing is one of the least efficient markets

Mass deportations will have very little impact on the housing market

Illegal immigration advocates attempt scaring policymakers with the specter of a housing crisis caused by mass deportations.


Advocates for dubious political policies often resort to scare tactics in hopes that policymakers will favor their policy prescriptions. For example, the advocates of ...

Mass deportations will have very little impact on the housing market

Rising mortgage rates will price out marginal buyers in 2017

If mortgage rates keep rising, home sales will be lower in 2017 than in 2016, prompting talk of another housing recession.

Remember all those stories assuring us that higher mortgage rates wouldn’t cause any problems with housing? Well, today’s featured article is the story where...

Rising mortgage rates will price out marginal buyers in 2017

Forget the costly coasts because housing wealth is about to shift inland

Coastal housing markets face headwinds while inland markets benefit from Trump’s economic policies.

Coastal housing markets had a great run over the last 40 years. Land use restrictions created a shortage, falling mortgage rates inflated prices, wage growth created demand, and trade and...

Forget the costly coasts because housing wealth is about to shift inland

A surprising legal maneuver that could stymie California Nimbys

The Fair Housing Act may be used to strike down land development restrictions that cause a disparate impact on minorities, which California’s process clearly does.

Fact: California house prices are high relative to income due to a shortage of available homes.
Fact: California Nimbys lobby ...

A surprising legal maneuver that could stymie California Nimbys

How to make California homes affordable by discouraging foreign investment

If California wanted to lower house prices, it could tax foreign investment and tax homes left vacant year-round.

The primary reason house prices are so high in California is a lack of supply. However, a secondary reason is the influx of foreign investors, many of whom don’t live in the...

How to make California homes affordable by discouraging foreign investment

Orange County housing transitioning from single-family homes to high-density condos

Orange County is no longer an LA County bedroom community. High-density condos overtake suburban detached homes as the dominant housing type.

I recently noted that The FHA loan limit dooms McMansions in California. The FHA loan limit creates a down payment barrier that first-time homebuyers ...

Orange County housing transitioning from single-family homes to high-density condos

How the fate of the housing policy hinges on an arcane Senate rule

Whatever legislation Congressional Republicans try to pass will be “talked to death” by Democrats in the Senate.

No one knows what Donald Trump will do as President, but since he is an egocentric dealmaker, it’s likely that he will want to sign legislation — even bad...

How the fate of the housing policy hinges on an arcane Senate rule

The FHA loan limit dooms McMansions in California

McMansions are no longer affordable or easily financeable in California, so builders will likely build fewer of them.


Urban planners and environmentalists advocate high-density development near transit hubs. They entreat us to screeds outlining the demerits of McMansions, and extoll the...

The FHA loan limit dooms McMansions in California

Prudent credits standards averted nearly 1,000,000 future foreclosures

Lenders wisely stopped from granting loans to nearly 1,000,000 unqualified borrowers over the last 6 years.

Many people blame the last housing bubble on lenders and subprime borrowers. Lenders abdicated their responsibility to vet their borrowers’ qualifications, and not surprisingly,...

Prudent credits standards averted nearly 1,000,000 future foreclosures

A Bernie Sanders sock puppet defeats a San Francisco condo development

Local officials in San Francisco denied a sound building project due to angst over Donald Trump’s election and the persuasion of a Bernie Sanders sock puppet.

Nimbys oppose new developments for two reasons. First, they don’t want to deal with more people in their neighborhoods and...

A Bernie Sanders sock puppet defeats a San Francisco condo development

Corrupt Chinese elites pillage working class landowners

Local Chinese government officials and real estate developers corruptly conspire to take land from peasants without just compensation.

In most countries around the world, a legal process known as eminent domain exists for taking private land for public purposes. Without eminent domain, we...

Corrupt Chinese elites pillage working class landowners

Coastal California down payments decrease by $8,520 on select homes in 2017

The conforming loan limit is set to rise by 10,650 in Coastal California, reducing down payment requirements by $8,520 on homes prices above this limit.

During the housing bubble, the conforming limit rose as high as $417,000, but when the housing bubble burst, this limit was raised to $729,750...

Coastal California down payments decrease by $8,520 on select homes in 2017

Is another wave of foreclosures coming?

The mortgage and foreclosure debacle of 2008 was cut short by government intervention. A second round of deferred distressed sales is yet to hit the market.

Is the mortgage and foreclosure crisis resolved or merely delayed? Americans believe the mortgage and foreclosure crisis of 2008 is over, ...

Is another wave of foreclosures coming?

How to sell a house for $100,000 profit and still lose money

Most homeowners ignore the carrying costs during their ownership period when they calculate the gain or loss on a sale.

If someone claims they bought a house for $900,000 and sold it for $1,000,000, how much money did they make? $100,000? No, not even close.
People tend to forget about the...

How to sell a house for $100,000 profit and still lose money

California NIMBYs don"t love their children

California nimbys prevent the construction of housing needed for the next generation of Californians.

Last month I wrote about how American Dream equates with home ownership, and the California Dream resembles the exclusionary policies of the landed gentry of Elizabethan England. Like the wo...

California NIMBYs don"t love their children

Will the Federal Reserve allow the economy to run hot?

At this point in history, the benefits of an overheating economy outweigh the detriments of a little inflation.

The Federal Reserve controls the economy’s gas pedal. They can step on the pedal by lowering rates to inject more fuel into the economic engine. They can also let off the gas by...

Will the Federal Reserve allow the economy to run hot?

Trapped: Homeownership period extends to record length

With millions trapped underwater, and with those with equity experiencing weak wage growth, most people choose to remain in their homes rather than moving up.

Americans love their homes. Over the last decade, they became so enamored with their abodes that many decided not to leave. Prior to the ...

Trapped: Homeownership period extends to record length

Trump"s tax plan will shift housing demand from move-ups to entry-level

By greatly reducing the tax advantage of mortgage debt, many high-wage renters may choose to remain renters rather than assume large debts to buy a house. However, by reducing taxes on lower-income Americans, Trump’s tax plan should stimulate demand for entry-level housing.

Over the ...

Trump"s tax plan will shift housing demand from move-ups to entry-level

Will the current real estate cycle end before the remote suburbs recover?

The housing cycle probably hasn’t reached a turning point because the far-flung suburbs haven’t recovered yet.

The old real estate adage says “you drive until you qualify.” Potential homebuyers substitute to far-flung suburbs (exurbs) because high house prices push them...

Will the current real estate cycle end before the remote suburbs recover?

Interest rates soar on Trump victory

The short-term reaction to Trump’s victory was a massive selloff in bonds causing interest rates to soar. Will this be the start of an alarming new trend for mortgage rates?

The financial media ascribes gyrations in the financial markets to current news events, mostly with no correlation...

Interest rates soar on Trump victory

Seven ways Donald Trump"s presidency will impact real estate

Nobody knows what Donald Trump will do, but it’s unlikely he will do anything that hurts real estate.


Reporters across America reluctantly trashed their canned reports on how Hillary Clinton’s presidency would impact the world. Since Donald Trump’s victory was such a...

Seven ways Donald Trump"s presidency will impact real estate

China"s real estate bubble burst could derail the world economy

The Chinese inflated a real estate bubble more than ten times larger than the United States. Bursting this bubble could destabilize the world economy.

What would happen if the Chinese housing bubble burst? Obviously, a real estate crash would devastate China, but since the Chinese economy is...

China"s real estate bubble burst could derail the world economy

I told you Donald Trump would win

Nobody thought it would happen, but Donald Trump surprised everyone with his election day performance. As I post this, the election isn’t decided, and it’s so close, it may not be for days, weeks, or months with recounts, but irrespective of the final outcome, Donald Trump surprised...

I told you Donald Trump would win

Proposition 51: How should California pay for its schools?

Since California can’t properly fund its schools with property tax revenues, school districts must look to other sources. Is there a better way?

What is the appropriate way to pay for schools? Most jurisdictions pay for schools with local property tax dollars, and since Proposition 13 was...

Proposition 51: How should California pay for its schools?

Contrarian signs of trouble in the housing market

The current market rally shows signs of maturity. Is it due to die of old age, or will this rally last forever?


Most people who speculate in financial markets lose money, and most of them fail to recognize their “safe investments” are actually risky speculative bets. The housing ...

Contrarian signs of trouble in the housing market

Should we subsidize renters like we do homeowners?

Both homeowners and renters face high housing costs, but only homeowners enjoy government bailouts, loan modifications, and protections to “keep their homes.”

Why don’t renters get bailed out like homeowners? It seems fairly obvious that homeowners think renters are degenerates and l...

Should we subsidize renters like we do homeowners?

Top 13 free housing data sites

For audiences ranging from academic researchers to ordinary homebuyers, housing market data suiting everyone is available free on the Internet.

The future of data is free.
Twenty years ago, real estate agents provided value simply because they had access to the secret list of houses for sale....

Top 13 free housing data sites

High home prices enrich existing homeowners and impoverish recent homebuyers

As home prices move higher, existing homeowners cheer, but new homebuyers assume excessive debts to climb the property ladder.


Most people accept the idea that ever-rising house prices are good, and that a decline in house prices is bad. However, this idea appears to only apply to housing....

High home prices enrich existing homeowners and impoverish recent homebuyers

Twenty-five years of falling mortgage rates boosted prices 30%

The mainstream media litters the internet with articles about how rising mortgage interest rates won’t hurt the housing recovery. To better understand why rising interest rates are such a big issue to housing, it’s worth reviewing the impact falling interest rates have had on house...

Twenty-five years of falling mortgage rates boosted prices 30%

False start: five day penalty, repeat old website

Have you ever been in a hurry to start something, and in your enthusiasm, you began too soon?
Well, for those of you that set your bookmarks to marketinsitenews.com, I apologize. I’m migrating back to the OC Housing News. I may try again to migrate to a new site in the future, but for...

False start: five day penalty, repeat old website

Solar panels evolve with attractive architectural integration

The future home comes equipped with solar panels charging home batteries and an electric car.


My grandfather loved new technologies. He bought a handheld calculator in the early 1970s for over $50. Over the 30 years that followed, calculators became much more complex, and much, much less...

Solar panels evolve with attractive architectural integration

A larger supply of housing is the best form of rent control

Rent control would be unnecessary if politicians allowed developers to build enough housing to meet the demands of our growing population.

Rents (and resale prices) spiral out of control in California, pressuring family budgets all across the state. Many people believe the solution is to put an...

A larger supply of housing is the best form of rent control

How the real estate guru scam works

Real estate gurus scam people with high-pressure sales, leaving their customers with little to show for the money wasted.


When I set out to raise money to buy properties in Las Vegas in 2010, many long-time readers weren’t thrilled about the idea. One of them created the graphic above to...
http://marketinsitenews.com/real-estate-guru-scam-works/

It"s high time for marijuana REITs

The marijuana industry needs financing and real estate for it’s expansion. New REITs spring up to meet the need.

Investing in real estate offers many opportunities to earn high returns — in the case of catering to medical marijuana growers, the “high” is literal. Because ...
http://marketinsitenews.com/high-time-marijuana-reits/

It"s time to reform Proposition 13

VOTERS WARM TO THE IDEA OF REFORMING PROPOSITION 13, BUT LARGE FINANCIAL INTERESTS WOULD VIGOROUSLY OPPOSE ANY ATTEMPTS TO CURTAIL THEIR SUBSIDY.

California legislators face limits on their ability to tax real estate due to Proposition 13, which limits the tax rate to 1% of purchase price with ...
http://marketinsitenews.com/time-reform-proposition-13/

Migration to MarketInSiteNews.com

Today is the first weekday in nearly 10 years that I didn’t publish a new post!
This morning we migrated the posts to the new website MarketInSiteNews.com. The transition is not yet complete, so please pardon the problems and glitches bound to accompany such a large undertaking.
The OC...
http://marketinsitenews.com/migration-marketinsitenews-com/

Real estate will suffer less than bonds when rates rise

Real estate investment trusts profit from cheap debt, and their value depends on low discount rates. Rising interest rates hurt them both ways.

House prices depend on debt. Of the four factors that determine house prices, three of them directly relate to financing terms. If mortgage interest...
http://marketinsite.wpengine.com/real-estate-will-suffer-less-bonds-rates-rise/

The two biggest worries in housing today

The specter of rising mortgage interest rates or an end to the flow of foreign investment concerns speculators in US real estate.

Many investors in real estate worry that the current recovery may be coming to an end. Economic expansions usually don’t last as long as this one, so many...
http://marketinsite.wpengine.com/two-biggest-worries-housing-today/

The two biggest worries in housing today

The specter of rising mortgage interest rates or an end to the flow of foreign investment concerns speculators in US real estate.

Many investors in real estate worry that the current recovery may be coming to an end. Economic expansions usually don’t last as long as this one, so many...
http://ochousingnews.com/blog/the-two-biggest-worries-in-housing-today/

Real estate will suffer less than bonds when rates rise

Real estate investment trusts profit from cheap debt, and their value depends on low discount rates. Rising interest rates hurt them both ways.

House prices depend on debt. Of the four factors that determine house prices, three of them directly relate to financing terms. If mortgage interest...
http://ochousingnews.com/blog/real-estate-will-suffer-less-than-bonds-when-rates-rise/

Are today"s homebuyers considering the impact of rising mortgage rates?

Buyers convince themselves rising mortgage rates won’t impact them, but they fail to consider how rising rates will curb home price appreciation.

I strive to educate this blog’s many readers and dispel fallacies surrounding residential real estate. Sometimes, the public impresses me...
http://marketinsite.wpengine.com/todays-homebuyers-considering-impact-rising-mortgage-rates/

The down payment barrier at the conforming loan limit

The down payment barrier inhibits home sales, but reduces the risk to the US taxpayer.

California endures a housing affordability problem. And it’s not merely that house prices are high. Families with high wages could finance mortgages large enough to buy more expensive properties, but they f...
http://marketinsite.wpengine.com/payment-barrier-conforming-loan-limit/

The great down payment barrier at the conforming loan limit

The down payment barrier inhibits home sales, but reduces the risk to the US taxpayer.

California endures a housing affordability problem. And it’s not merely that house prices are high. Families with high wages could finance mortgages large enough to buy more expensive properties, but they f...
http://ochousingnews.com/blog/the-great-down-payment-barrier-at-the-conforming-loan-limit/

One housing market indicator you should never trust

The “months of supply” indicator has little or no predictive power and often gives a false impression of the strength or weakness of the real estate market.

Realtors invented the “months of supply” to measure market absorption, providing a reading of how fast homes sell...
http://marketinsite.wpengine.com/one-housing-market-indicator-never-trust/

One housing market indicator you should never trust

The “months of supply” indicator has little or no predictive power and often gives a false impression of the strength or weakness of the real estate market.

Realtors invented the “months of supply” to measure market absorption, providing a reading of how fast homes sell...
http://ochousingnews.com/blog/one-housing-market-indicator-you-should-never-trust/

The low housing inventory meme must die

realtors consistently and falsely blame low inventory for weak sales. The truth is that prices are getting too high for many buyers to afford.

realtors follow an unwritten rule: never say prices are too high. Occasionally, they may say something about affordability, but realtors generally...
http://marketinsite.wpengine.com/the-low-housing-inventory-meme-must-die/

No cash-out refinancing for Ponzi borrowers... yet

Homeowners cash-out their home equity to supplement their incomes reminiscent of the bad behavior that spiraled out of control during the housing mania.

Lenders offer homeowners nearly free money, so unsurprisingly, borrowers take the money. During the housing mania, bankers offered this money ...
http://marketinsite.wpengine.com/no-cash-out-refinancing-for-ponzi-borrowers-yet/

California"s future: landed gentry and transitory renters

The working class in California struggles with high rent until they give up and move out of state, leaving behind the landed gentry.


California housing policies devastate the lower middle class. Anyone who lives in California copes with higher housing costs than nearly everywhere else in the...
http://marketinsite.wpengine.com/californias-future-landed-gentry-transitory-renters/

California"s future: landed gentry and transitory renters

The working class in California struggles with high rent until they give up and move out of state, leaving behind the landed gentry.


California housing policies devastate the lower middle class. Anyone who lives in California copes with higher housing costs than nearly everywhere else in the...
http://ochousingnews.com/blog/californias-future-landed-gentry-and-transitory-renters/

Test Post from Real Estate Hawks

Test Post from Real Estate Hawks http://realestatehawks.com

Are today"s homebuyers considering the impact of rising mortgage rates?

Buyers convince themselves rising mortgage rates won’t impact them, but they fail to consider how rising rates will curb home price appreciation.

I strive to educate this blog’s many readers and dispel fallacies surrounding residential real estate. Sometimes, the public impresses me...
http://ochousingnews.com/blog/are-todays-homebuyers-considering-the-impact-of-rising-mortgage-rates/

Los Angeles"s turf removal program succeeded brilliantly

Despite criticisms of the methods, L.A.s turf removal program eliminated millions of square feet of water-hungry grass.

The recent drought in California prompted many stories of drought shaming that amounted to peer pressure to reduce water usage. People wore their brown yards as a badge of...
http://ochousingnews.com/blog/los-angeless-turf-removal-program-succeeded-brilliantly/

Buying out-of-state rental properties goes mainstream

New businesses help people overcome the hurdles of finding, securing, and managing rental properties in far-flung locales.

Back in August of 2010, I bluntly told people to buy Las Vegas real estate. I noted that the median home in Las Vegas — a 3 bedroom 2 bath detached property — cost less than...
http://ochousingnews.com/blog/buying-out-of-state-rental-properties-goes-mainstream/

A possible solution to California"s housing crisis

California could cure its housing shortage by mandating that large projects and municipalities provide sufficient housing to match commercial development.

California needs more housing. Everyone recognizes this fact, even the nimbys who oppose all new developments. California builders and...
http://ochousingnews.com/blog/a-possible-solution-to-californias-housing-crisis/

Chinese housing: Beauty contest or Ponzi scheme?

Chinese housing isn’t valued based on objective financial metrics. Investors buy what they believe others will find valuable.

Encouraged by the government, the Chinese people support a massive real estate Ponzi scheme. Chinese investors value property subjectively, like a beauty contest,...
http://ochousingnews.com/blog/chinese-housing-beauty-contest-or-ponzi-scheme/

Wall Street doubling down on rental home investments

While probably late to the party, new large investors in single-family rentals embrace solid reasons for investing in this business model.

Wall Street bought thousands of foreclosures during the housing bust. The capital from these investors absorbed the excess of foreclosures from the millions...
http://ochousingnews.com/blog/wall-street-doubling-down-on-rental-home-investments/

No cash-out refinancing for Ponzi borrowers... yet

Homeowners cash-out their home equity to supplement their incomes reminiscent of the bad behavior that spiraled out of control during the housing mania.

Lenders offer homeowners nearly free money, so unsurprisingly, borrowers take the money. During the housing mania, bankers offered this money ...
http://ochousingnews.com/blog/no-cash-out-refinancing-for-ponzi-borrowers-yet/

The low housing inventory meme must die

realtors consistently and falsely blame low inventory for weak sales. The truth is that prices are getting too high for many buyers to afford.

realtors follow an unwritten rule: never say prices are too high. Occasionally, they may say something about affordability, but realtors generally...
http://ochousingnews.com/blog/the-low-housing-inventory-meme-must-die/

Four unique features of the new normal in housing

The four unique features are (1) low mortgage interest rates, (2) low MLS inventory, (3) low owner-occupant demand, and (4) high but affordable house prices.

Prior to the housing bubble, the normal state of affairs for the housing market was slowly but steadily rising prices that matched the...
http://ochousingnews.com/blog/four-unique-features-of-the-new-normal-in-housing/

Are homebuilders producing enough homes?

 

Homebuilders only build houses if they can sell them. If homebuilders produce too many, they accumulate standing inventory, which they have to discount or incentivize in order to sell. If the problem persists, they lose money on the sales, and unless they want to go out of business, they...
http://ochousingnews.com/blog/are-homebuilders-producing-enough-homes/

Another year of bogus housing forecasts begins

Forecasters begin their yearly extrapolation of existing trends and pass it off as a genuine forecast.


A few weeks ago I announced that I began a new position as Market InSite’s Chief Economist. When people hear about what I do, one of the first questions they ask is “what’s...
http://ochousingnews.com/blog/another-year-of-bogus-housing-forecasts-begins/

Will permitting mother-in-law suites ruin good neighborhoods?

Permitting mother-in-law suites will increase supply, but it also brings more potential problems to neighborhoods that allow it.

There goes the neighborhood. Most homeowners fear what might happen if their neighbors rent out rooms or convert their garages to makeshift apartments. These new...
http://ochousingnews.com/blog/will-permitting-mother-in-law-suites-ruin-good-neighborhoods/

People leave California because house prices are too high

It costs so much to live in California that many people flee the state in search of lower cost housing and a better quality of life.

California is an expensive place to live. Due to the chronic shortage of housing supply that inflates California house prices and rents, many people can’t a...
http://ochousingnews.com/blog/people-leave-california-because-house-prices-are-too-high/

Are high home prices in Silicon Valley stifling start ups?

Many new companies form in Silicon Valley because they gain access to capital and a large well-trained workforce. But high housing costs forces wages up to attract talent, raising the start-up costs, and reducing the number of start-ups funded.

Many entrepreneurs with great ideas for new...
http://ochousingnews.com/blog/are-high-home-prices-in-silicon-valley-stifling-start-ups/

Top 10 states for long-term delinquent mortgage squatting

Hawaii tops the list of the states with the highest percentage of borrowers who refuse to pay their mortgages for three years or more. A free house in Hawaii handsomely rewards bad behavior, doesn’t it?

Millions of Americans borrowed money under unstable loan terms during the housing...
http://ochousingnews.com/blog/top-10-states-for-long-term-delinquent-mortgage-squatting/

Housing will no longer cycle like it has over the last 40 years

 

To everything (turn, turn, turn)
There is a season (turn, turn, turn)
And a time to every purpose, under heaven
A time to build up, a time to break down
A time to dance, a time to mourn
A time to cast away stones, a time to gather stones together
The Byrds (and Ecclesiastes 3)
Prior to...
http://ochousingnews.com/blog/housing-will-no-longer-cycle-like-it-has-over-the-last-40-years/

Is the American Dream dead to the Millennial generation?

Do Millennials reject the American dream of home Ownership, or does it reject them?


When the Baby Boomers and Generation X entered the workforce, their student loan debt was manageable, they found good jobs, and when they wanted to buy a family home, prices were affordable. Those generations...
http://ochousingnews.com/blog/is-the-american-dream-dead-to-the-millennial-generation/

Millennials operate personal Ponzi schemes like Bernie Madoff

 

The Millennial Generation was too young to participate in the housing bubble of the early 00s. Instead, Baby Boomers and Generation Xers were the sophisticated financial geniuses who over-borrowed and overpaid for housing on a grand scale. What’s the main reason they did this? They...
http://ochousingnews.com/blog/millennials-operate-personal-ponzi-schemes-like-bernie-madoff/

The down payment barrier at the conforming loan limit

Higher priced houses are affordable to many families with high incomes, but they lack the hefty down payments necessary to close the deal.

Last year I reported that Housing inventory is abundant at prices buyers can’t afford. The constant refrain in the financial media is that home sales are w...
http://ochousingnews.com/blog/the-down-payment-barrier-at-the-conforming-loan-limit/

Is suburban sprawl a positive feature we should embrace?

Suburban sprawl doesn’t create affordability. Instead, it’s a sign of community policies that encourage production of all kinds of housing. Affordability is a function of the quantity of housing, not housing type.


Most urban planners and landscape architects dislike suburban ...
http://ochousingnews.com/blog/is-suburban-sprawl-a-positive-feature-we-should-embrace/

California house prices will never fall (rapidly) ever again

The next housing bust will preserve prices at the expense of home sales volume.

Real estate only goes up, right? The idea that real estate only goes up was the erroneous belief shared by every participant in the housing mania. Everyone who believed in this fallacy threw caution to the wind and...
http://ochousingnews.com/blog/california-house-prices-will-never-fall-rapidly-ever-again/

Will "try before you buy" succeed in residential real estate?

Would you like to rent a home for a year or more to decide if you really wanted it? You can.


Many companies will allow potential customers to try their products for some period of time before the customer buys it. If the customer doesn’t like the product, the customer may return the...
http://ochousingnews.com/blog/will-try-before-you-buy-succeed-in-residential-real-estate/

Most effective measure of housing market value is rental parity analysis

Rental parity analysis provides a benchmark of value that enables buyers and sellers to anticipate changes in the market.

People who invest in stocks often use the price-to-earnings ratio among others to estimate value. People who trade stocks use a variety of technical indicators to both...
http://ochousingnews.com/blog/most-effective-measure-of-housing-market-value-is-rental-parity-analysis/

Wells Fargo fraud ensures survival of the CFPB

Since its inception, the CFPB has been under attack by the financial industry. The huge Wells Fargo fraud ensures it’s survival.

The financial elites in the United States hate the Consumer Financial Protection Bureau (CFPB) because the CFPB opposes to those who want to rape and pillage...
http://ochousingnews.com/blog/wells-fargo-fraud-ensures-survival-of-the-cfpb/

How hedge funds clean up the trash from the housing bust

Hedge funds act as the garbage scows of the housing bust cleaning up bad loans and distressed properties using a variety of tactics.

Prior to the housing bust, mom and pop investors and professional property rehabbers acquired most distressed residential properties. However, since the housing...
http://ochousingnews.com/blog/how-hedge-funds-clean-up-the-trash-from-the-housing-bust/

Experian warns lenders to prepare to can-kick recasting HELOCs

The wave of HELOC recasts is upon us, and lenders must cut deals with borrowers or face another wave of delinquencies and foreclosures.

Since last night was the kickoff of the NFL regular season, it’s only fitting that lenders prepare for another long season of can-kicking bad loans. This...
http://ochousingnews.com/blog/experian-warns-lenders-to-prepare-to-can-kick-recasting-helocs/

Why do people buy McMansions?

Some people like extra living space, others like to show off. Buying a McMansion appeals to both types of buyers.

For years urban planners worked to change public attitudes toward smaller houses near public transit stops. The tiny home movement ties into the revulsion many people feel for the...
http://ochousingnews.com/blog/why-do-people-buy-mcmansions/

Will the next president and Congress reform housing finance?

 Until they are forced to by a crisis, it’s unlikely the next president or Congress will pass meaningful housing finance reform.

Between the GSEs (Fannie Mae and Freddie Mac) and the FHA, the government directly backs more than 80% of loan originations in the United States. Legislators ...
http://ochousingnews.com/blog/will-the-next-president-and-congress-reform-housing-finance/

Rich cities prosper while poor cities languish

High wage growth and nimby behavior that unduly restricts housing supply is a combination that inflates house prices in major cities.

For whoever has will be given more, but whoever does not have, even what he has will be taken away from him.
Jesus Christ — Mark 4:25
The rich get richer...
http://ochousingnews.com/blog/rich-cities-prosper-while-poor-cities-languish/

Liquidity risk: what happens when home sellers can"t get their asking price?

When sellers can’t get their asking price, their alternatives are not great, but if they bought below rental parity, at least they have an option that isn’t financially devastating.

My first job out of school was with a retirement community developer in Leesburg, Florida. Since I...
http://ochousingnews.com/blog/liquidity-risk-what-happens-when-sellers-cant-get-their-asking-price/

Homeowner bailouts benefited lenders far more than homeowners

While some underwater homeowners were saved by federal reserve policy, the main beneficiaries of this stealth bailout were the banks.

The populace was sold on quantitative easing and mortgage interest rate stimulus as a measure to save “Main Street.” It was said this money pumped...
http://ochousingnews.com/blog/homeowner-bailouts-benefited-lenders-far-more-than-homeowners/

Are demographic changes helping or hurting housing?

The housing market sales doldrums we experience today is partly a result of the smaller Generation X hitting their prime homebuying years. Most anticipate a resurgence of housing when Millennials start buying homes in larger numbers.

Back in 1997 a demographic study shook the homebuilding...
http://ochousingnews.com/blog/are-demographic-changes-helping-or-hurting-housing/

Can mortgage interest rates inflate a housing bubble?

As mortgage rates rise, home sales will decline, and if it goes on long enough, prices will fall.

In rocketry, escape velocity is the speed required to propel an object into a stable orbit. In a housing market, escape velocity is a rate of price and sales volume increase necessary to sustain an...
http://ochousingnews.com/blog/can-mortgage-interest-rates-inflate-a-housing-bubble/

Federal tax policies inflate house prices for high wage earners

Home mortgage interest deduction encourages high wage earners to borrow more; capital gains tax exemption encourages wealthy to invest more in personal homes. The combined effect inflates house prices.

Politicians promote home ownership through a variety of subsidies and tax loopholes,...
http://ochousingnews.com/blog/federal-tax-policies-inflate-house-prices-for-high-wage-earners/

The recent apartment boom is great for California

By providing more housing units, apartment developers will lower housing costs over time and relieve the pressure on Californian’s personal budgets.

Combating the chronic shortage of available housing in California requires building more places to live. It matters little if these new...
http://ochousingnews.com/blog/the-recent-apartment-boom-is-great-for-california/

Why home prices feel expensive when ownership costs suggest otherwise

Houses feel expensive because an unusually large percentage of the payment is going toward principal amortization.

For the last few years, my monthly housing market reports rate most communities across Southern California highly, suggesting it’s a very good time to buy a house. Yet...
http://ochousingnews.com/blog/why-do-home-prices-feel-so-expensive-when-the-cost-of-ownership-says-otherwise/

New houses will be smaller over the next decade

As Millennials buy new homes, builders will provide smaller houses Millennials can afford.

For years, academics in planning circles touted the rise of the small, high-density housing alternatives near mass-transit hubs. While this product might be the future of housing, it won’t be due to any p...
http://ochousingnews.com/blog/new-houses-will-be-smaller-over-the-next-decade/

Seasonal home sales slowdown particularly harsh in 2016

Both the data and the anecdotes demonstrate a noticeable and significant slowdown in home sales. Is it merely seasonal?

I am moving out of my current rental and back to Orange County (more on that later). I agreed to allow my landlord to market the property for sale over the last month while I...
http://ochousingnews.com/blog/seasonal-home-sales-slowdown-particularly-harsh-in-2016/

When Nimbys lose, families gain new homes

When Nimbys lose their emotional fights to block new development, new families move into the neighborhood and enjoy new houses that otherwise would not have been built.


Real estate development provides homes, offices, shops, features of the built environment the define the quality of everyday...
http://ochousingnews.com/blog/when-nimbys-lose-new-families-gain-new-houses/

The flow of Chinese buyers in Irvine slows to a trickle

A rising US dollar makes Irvine homes much more expensive for Chinese buyers, and capital controls makes it much more difficult to move money out of China for those inclined to do so.


Many Chinese investors consider Irvine, California, a safe haven where they can store their wealth far from...
http://ochousingnews.com/blog/the-flow-of-chinese-buyers-in-irvine-slows-to-a-trickle/

Who gains and who loses with high house prices?

High house prices are demanded by foolish Ponzis, enjoyed by real homeowners, and favored by politicians pandering to both groups.

Why are high house prices the keep rising considered a universal good? Does everyone benefit if house prices are high and keep moving higher? When house prices move...
http://ochousingnews.com/blog/who-gains-and-who-loses-with-high-house-prices/

Are property speculators ignoring the risks again?

Most real estate investors are really speculators betting on appreciation. It’s a strategy destined to be a loser.

One look at the MLS, and everyone sees that house prices are very high. People don’t get as much house for their money because house prices rose faster than...
http://ochousingnews.com/blog/48462-2/

Entry-level houses scarce because underwater owners can"t sell

Entry-level housing is not available for sale because many owners of these properties are still underwater and unable to list and sell their homes.


From 2000 to 2005, house prices more than doubled in many areas of the country. Although rates of home price appreciation that high can’t be...
http://ochousingnews.com/blog/entry-level-houses-scarce-as-underwater-owners-cant-sell/

The safest real estate investments are in underwater markets like Las Vegas

The more underwater homeowners a market has, the less likely it is to see much inventory on the MLS until prices exceed peak values.

Many people leave Las Vegas broke. Most of them lost their money in games of chance, but the latest casualties of Las Vegas were ordinary home owners who bought...
http://ochousingnews.com/blog/the-safest-real-estate-investments-are-in-underwater-markets-like-las-vegas/

Millennials doomed to pay rent for life to Baby Boomers

If Millennials chose a lifetime of renting over owning, they may pay that rent to fund the retirement of a Baby Boomer.

My parents are Baby Boomers. Five years ago, I convinced them to retire part-time in Las Vegas and purchase as many rental homes as they could. Their retirement plan depends...
http://ochousingnews.com/blog/millennials-doomed-to-pay-rent-for-life-to-baby-boomers/

Home sales weaken as Chinese investors sour on US real estate

A rising US dollar makes Irvine homes much more expensive for Chinese buyers, and capital controls makes it much more difficult to move money out of China for those inclined to do so.

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home...
http://ochousingnews.com/blog/is-the-chinese-love-affair-with-us-real-estate-turning-sour/

Is the benefit of homeownership to society worth the subsidy cost?

Homeownership is considered a universal good by politicians. However, the benefits of ownership are not worth the costs of the subsidies politicians put in place.

For over 100 years, every presidential administration embraced homeownership as a panacea, quelling civil unrest, creating citizens...
http://ochousingnews.com/blog/is-the-benefit-of-homeownership-to-society-worth-the-subsidy-cost/

The boom that never materialized: boomerang homebuyers

Very few recent mortgage originations were from borrowers with a previous foreclosure. Less than 25% ever return to homeownership.


It’s human nature to find hope when times are bleak. When housing crashed, bankers and underwater loanowners clung to any hope of recovery that would bail...
http://ochousingnews.com/blog/the-boom-that-never-materialized-boomerang-homebuyers/

Is Coastal California housing looking frothy?

House prices are high in Coastal California causing sales to wane and many to question whether or not we pushed prices up too high.

In previous real estate cycles, when house prices began to rise, people became excited about participating in the real estate market, and the buying activity would...
http://ochousingnews.com/blog/is-coastal-california-housing-looking-frothy/

U.S. homeownership rate plummets to five-decade low

Despite legislators and bureaucrats best efforts, the homeownership rate continues to slide.


Since the Great Depression, presidential administrations with a cooperative Congress implemented policies intended to maximize the homeownership rate. At the end of World War II, the returning...
http://ochousingnews.com/blog/u-s-homeownership-rate-plummets-to-five-decade-low/

Cuts to FHA insurance premium failed to activate first-time homebuyers

The cuts to the FHA insurance premium had little impact on sales overall, but more borrowers used FHA insurance. Was the policy a success?


Lowering the FHA insurance fees was the right idea at the right time. Due to the losses sustained and expected at the FHA insurance fund, the fees were...
http://ochousingnews.com/blog/cuts-to-fha-insurance-premium-failed-to-activate-first-time-homebuyers/

High house prices slowing California home sales

Since most people no longer fear being priced out, prospective home buyers see high prices as a deterrent rather than an incentive to recklessly jump into the market.

Generally, when the price of any good or service goes up, buyer demand at the higher price diminishes because fewer people can...
http://ochousingnews.com/blog/high-house-prices-slowing-california-home-sales/

Foreclosure victim story: the banks are persecuting her

Most feedback I receive from readers is positive, but occasionally someone with an opposing point of view has an emotional reaction and writes me to correct my many misconceptions.

I recently ran the post, Responsible homeowners did not lose their homes in foreclosure. In that post I made the...
http://ochousingnews.com/blog/foreclosure-victim-story-the-banks-are-out-to-get-her/

Do school ratings reflect the quality of education that warrants high real estate values?

School ratings reflect where concerned parents move with their children, not the quality of education a school provides.

Parents want to provide their children with every advantage in life. Those students with the best education generally enjoy higher wages and greater life achievement than...
http://ochousingnews.com/blog/do-school-ratings-reflect-the-quality-of-education-that-warrants-high-real-estate-values/

More houses and higher density will bring down housing costs over the long term

More housing supply will reduce the competition among workers for available properties. More housing supply is certain to bring down housing costs in the long-term.

California Governor Jerry Brown recently proposed to reduce the regulatory burden on real estate developers to facilitate...
http://ochousingnews.com/blog/more-houses-and-higher-density-will-bring-down-housing-costs-over-the-long-term/

Mortgage interest rates may hit new record low

The housing market can’t absorb a sudden or large increase in mortgage rates without major declines in sales and perhaps even decreases in prices.

Congress passed the Dodd-Frank financial reform in response to the housing bubble and bust. These new Dodd-Frank mortgage regulations will prevent f...
http://ochousingnews.com/blog/mortgage-interest-rates-may-hit-new-record-low/

Industry insider fosters false hope for boomerang buyer surge

2015 was touted as the year of the boomerang buyer. Lenders and realtors prepared, and the financial media wrote the invitations, but the boomerang buyers failed to arrive.

Many people criticize the financial media for running negative stories that “talk down the market,” but...
http://ochousingnews.com/blog/reporters-foster-false-hope-for-boomerang-buyer-surge/

Rising prices allows home sellers to cash out and extinguish debts

Many people sell when prices rise high enough for them to retire, move up, or extinguish their debts.


Many people imagine the property ladder as a progression from a condo near work, to a house in the suburbs, to a mansion by the beach. Many people buy entry-level housing, and when prices rise...
http://ochousingnews.com/blog/rising-prices-allows-home-sellers-cash-extinguish-debts/

The journey home

I was going to write a real estate post to get back into the swing of things, but I decided instead to write about my vacation experience. It was more inspiring for me. I hope you enjoy it.


My grandfather just celebrated his 99th birthday. Based on what I observed, he seems like he still has...
http://ochousingnews.com/blog/the-journey-home/

Responsible homeowners did not lose their homes in foreclosure

Whether or not “responsible” homeowners lost their homes depends on how you define “responsible.”

A common theme in the financial media is that people lost their homes during the housing bust due to unemployment, probably because it’s easier than acknowledging the...
http://ochousingnews.com/blog/responsible-homeowners-not-lose-homes-foreclosure/

Real estate negotiation: motivations of the parties

A house is worth no more than a buyer is willing to pay and no less than a seller is will to accept.

Motivation of the Other Party
Professional poker players spend hours studying people’s reactions to try to elucidate the cards their opponents are holding. In poker if players can determine what ...
http://ochousingnews.com/blog/real-estate-negotiation-motivations-of-the-parties/

Top six worst manifestations of mortgage equity withdrawal

Mortgage equity withdrawal is a bad idea that often leads to disaster.

I have often wondered if I had made different decisions during the bubble if I would have been caught up in the frenzy. Although I don’t believe I could have fully ingested kool aid, I probably would have behaved like most o...
http://ochousingnews.com/blog/top-four-worst-manifestations-of-mortgage-equity-withdrawal/

Los Angeles Housing Market Report: July 2016

Historically, properties in this market sell at a 9.5% discount. Today’s discount is 16.0%. This market is 6.5% undervalued.
Median home price is $534,900 with a rental parity value of $639,600. This market’s discount is $104,700.
Monthly payment affordability has been improving over...
http://ochousingnews.com/blog/los-angeles-housing-market-report-july-2016/

Vacation 2016: Castle in the Sky

 

Over the last few days, I wrote about my family history in Ancestral Call, my youth in Community of Elders, my teenage years in Coming of Age, and today I conclude with a little perspective on life and an expression of one of my deepest desires. You never know what will happen when you...
http://ochousingnews.com/blog/vacation-2016-castle-in-the-sky/

Vacation 2016: Coming of Age

 

Having grown up in a community of elders with a long heritage, I have a deep connection to my old home town of Adams-Friendship, Wisconsin. I lived there throughout a blissful childhood until my family moved away when I was eleven years old. I struggled to adapt to my new environment...
http://ochousingnews.com/blog/vacation-2016-coming-of-age/

Vacation 2016: A Community of Elders

 

Childhood in a community of elders
Yesterday, in Ancestral Call, I detailed my family history. I was born into a close-knit rural community, swaddled by family, extended family and a broader community which shared the same values. Both my grandparents living within a few miles of one...
http://ochousingnews.com/blog/vacation-2016-a-community-of-elders/

Vacation 2016: Ancestral Call

I will be on vacation the remainder of this week. If you want to know where I’m going and why, read on.

My rural roots
My roots run deep in the rural farm community of Friendship, Wisconsin. My fraternal family line can be traced back to Thomas Roberts, a Welshman born in 1831. Thomas...
http://ochousingnews.com/blog/vacation-2016-ancestral-call/

What happens to people who live beyond their means?

I am out of town this week. Please carry on in the astute observations without me.
I chose to bring this piece out again because I am going through a reset of my own entitlements. Several months ago, I trashed or sold most of my stuff. I wanted to purge my attachments, but recent events...
http://ochousingnews.com/blog/what-happens-to-people-who-live-beyond-their-means/

What would happen if everyone believed real estate prices only go up?

Ten years ago people truly believed real estate prices only go up. As a result people behaved imprudently and borrowed too much money because they believe they could always sell the property for enough to pay the loan.

The mantra of the National Association of Realtors is “real estate only goes ...
http://ochousingnews.com/blog/what-would-happen-if-everyone-believed-real-estate-prices-only-go-up/

Fewer home sales or lower prices sure to follow higher mortgage interest rates

In the absence of rising wages, when mortgage interest rates go up, one of two things will happen: either sales will fall, or prices will fall. Since we don’t have a free market in housing, sales will fall and remain depressed for a very long time.

Assuming a consistent payment, higher...
http://ochousingnews.com/blog/fewer-home-sales-or-lower-prices-sure-to-follow-higher-mortgage-interest-rates/

Should homeowners be allowed to risk their house?

Over 6 million foreclosures were caused by mortgages with risky terms few borrowers understood. It’s government’s role to protect people from themselves, particularly when taxpayers fund the bailouts.


Flying high is dangerous; just ask Icarus. Everybody was flying high on free...
http://ochousingnews.com/blog/should-homeowners-be-allowed-to-risk-their-house/

Why did Dodd-Frank effectively ban mortgage affordability products?

Mortgage affordability products produce short term results, but they are unstable, and widespread proliferation leads to millions of foreclosures.


Affordability products in the 00s were the financing panacea everyone in real estate hoped for. Widespread use of affordability products ushered in...
http://ochousingnews.com/blog/why-did-dodd-frank-effectively-ban-mortgage-affordability-products/

realtors" top 10 ethical problems

Real estate agents are among the least ethical business practitioners. They desperately need a culture of conformance to a code of ethics.

The law defines what a society deems as minimally appropriate conduct. People who violate the law (and get caught) pay penalties or endure incarceration for...
http://ochousingnews.com/blog/realtors-top-10-ethical-problems/

Test Post from OC Housing News

Test Post from OC Housing News http://ochousingnews.com/blog

OCHN: Why aren"t homebuilders producing more homes?

Homebuilders won’t build what they can’t sell, and household formation isn’t so robust that builders must provide more to keep pace with demand.

Since 2012 the financial media chronicled the reflation of the old housing bubble but portrayed it falsely as a robust recovery...
Why aren"t homebuilders producing more homes?

---

OCHN: San Bernardino County Housing Market Report: April 2016

IRVINE, Calif., January 2, 2016 – OC Housing News
San Bernardino County Housing Market Report: January 2016
Historically, properties in this market sell at a 25.7% discount. Today’s discount is 32.2%. This market is 6.6% undervalued.
Median home price is $280,200 with a rental parity value ...
San Bernardino County Housing Market Report: April 2016

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OCHN: How "sophisticated" financial managers operate personal Ponzi schemes

In its simplest form, a personal Ponzi scheme is borrowing money to pay debt service: acquiring new debt to pay old debt. It’s a path to disaster.

What is a personal Ponzi scheme? Aren’t Ponzi schemes the advanced financial management crime of sophisticated money managers like...
How "sophisticated" financial managers operate personal Ponzi schemes

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OCHN: Two strategies for more abundant and less expensive housing

By reducing local regulatory hurdles to new development, and by providing subsidies to low-income Americans, the free market will provide more housing that will drive down costs for everyone.


Housing costs too much in the United States because we don’t provide enough housing to meet...
Two strategies for more abundant and less expensive housing

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OCHN: Could you live in a less than 300 square feet?

The tiny house movement is the extreme of housing and possession austerity. Would anyone with the means to live with more chose to live that way?

When builders and developers create new projects, they generally produce a variety of floorplans to meet a market niche where they can reasonably...
Could you live in a less than 300 square feet?

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OCHN: Home mortgage interest deduction no longer benefits anyone

Only high wage earners save on taxes due to the home mortgage interest deduction, and the benefit is lost due to higher house prices paid be everyone utilizing this tax subsidy.

Does the home mortgage interest deduction serve any useful purpose? Usually, when the government subsidizes...
Home mortgage interest deduction no longer benefits anyone

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OCHN: What four factors really determine prices in the housing market?

There are four fundamentals that determine resale value: borrower income, allowable debt-to-income ratios, interest rates, and down payment requirements.


When economists write about the fundamentals of housing, they usually mention job and wage growth, both of which impact sales (of special...
What four factors really determine prices in the housing market?

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OCHN: Real estate investors are NOT crowding out family homebuyers

The National Association of realtors perpetuates the myth that investors are scooping up family homes and leaving potential buyers out in the cold.

Many investors use the OC Housing News to search for properties because it provides a detailed investment analysis of every home available for sale...
Real estate investors are NOT crowding out family homebuyers

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OCHN: A decade ago, housing bulls were completely and catastrophically wrong

Back in 2006 the housing bulls weren’t just a little wrong. They were completely and totally and unequivocally incorrect in every way.

I recently had a conversation with a CEO of a large housing market forecasting company. In our conversation, I told him about my experience as a housing...
A decade ago, housing bulls were completely and catastrophically wrong

---

OCHN: Today"s homebuyers unwilling to climb the property ladder like previous generations

People shopping for houses today are unwilling to purchase substandard housing in hopes of trading up at some later date.

Houses are expensive. Many renters would like to buy a house, but they lack the down payment necessary, and many renters are early in their careers when their income...
Today"s homebuyers unwilling to climb the property ladder like previous generations

---

OCHN: Big banks are too big to innovate

If an institution is too big to fail, then it must not be allowed to take innovative risks because the potential consequences for the economy are dire.

Innovation entails risk. Any profitable business venture that is widely known to be successful is rife with competitors, so profit margins...
Big banks are too big to innovate

---

OCHN: Which generation was hurt the most by the housing bust?

Generation X was hurt more than the Baby Boomers or the Millennials by the housing bust because many Generation Xers lost their starter homes, and many others are still trapped in them.

The Baby Boomers lost their retirement savings.
The Millennials can’t afford to enter the housing...
Which generation was hurt the most by the housing bust?

---

OCHN: Californian"s share zealous faith in rapid home price appreciation

California has a major cultural “religion” that cuts across traditional denominational lines: the religion of real estate and faith in rapid home price appreciation.

Religious conviction provides meaning, hope, and joy to billions of people. Faith is belief by choice, generally in the absence of...
Californian"s share zealous faith in rapid home price appreciation

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OCHN: Dodd-Frank works well, so financial elites hate it

Dodd-Frank created the Consumer Financial Protection Bureau that prevents the finance industry from ripping off its customers. More importantly, Dodd-Frank saves homeowners and taxpayers from another painful housing bust.

In the past, whenever home affordability became a problem, lenders would...
Dodd-Frank works well, so financial elites hate it

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OCHN: What happens to high-end real estate if money laundering stops?

The Panama Papers uncovered the money laundering schemes funneling millions into high-end real state. What happens to this market if the flow of illegal funds suddenly stops?

New York city is flooded with Russian cash.
Irvine, California, is flooded with Chinese cash.
Miami, Florida, is flooded...
What happens to high-end real estate if money laundering stops?

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OCHN: Are Chinese savers coerced into supporting a real estate Ponzi scheme?

By eliminating other alternatives for investing saving and encouraging real estate speculation, the Chinese government compels its citizens to sustain a Ponzi scheme, allocating resources where they are not needed.

People fuel financial manias with greed and foolish optimism. Generally, prices...
Are Chinese savers coerced into supporting a real estate Ponzi scheme?

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OCHN: The epic fail of boomerang homebuyers

2015 was touted as the year of the boomerang buyer. Lenders and realtors prepared, and the financial media wrote the invitations, but the boomerang buyers failed to arrive.


The financial media periodically runs stories about the return of boomerang buyers, those who lost their homes in...
The epic fail of boomerang homebuyers

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OCHN: Five most common lies realtors tell

realtors frequently lie to their clients to close deals and generate commissions, placing their needs and desires above their clients.


Every word she writes is a lie, including “and” and “the.” Mary McCarthy

When a realtor talks, do you believe a word of it? At some...
Five most common lies realtors tell

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OCHN: Homeowners deduct cheap consumer debt interest while renters pay higher rates

Homeowners convert consumer debt into tax-deductible debt through home equity lines of credit. Since this debt is secured by real estate, homeowners also pay much less for it.

HELOCs are making a comeback! This is great news for Ponzis who want free money from stupid lenders, but it’s a...
Homeowners deduct cheap consumer debt interest while renters pay higher rates

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OCHN: How to earn huge profits on distressed residential properties

Buying distressed residential properties, fixing them up, and holding them through the recovery is a great way to earn huge profits.

I am a big fan of buy-and-hold residential real estate, but that isn’t the only way to make money from this asset class. Home flipping is one extreme, and...
How to earn huge profits on distressed residential properties

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OCHN: Academics prove the desire for free money causes financial manias

Financial bubbles are real. A recent academic study proves people change their behavior when they witness their neighbors making money with little effort.

Everyone wants free money. A new academic paper provides strong evidence that the desire to obtain free money drives the insane behavior in...
Academics prove the desire for free money causes financial manias

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OCHN: Policies that saved the banks deny homeownership to Millennials

By saddling Millennials with copious amounts of student loan debt and by trapping Generation X in overpriced starter homes, Millennials endure too much debt and too little available supply to become homeowners.

The largest generation in American history is not buying homes, and it’s...
Policies that saved the banks deny homeownership to Millennials

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OCHN: The surprising change in buyer behavior caused by the housing bust

With the fear of being priced out gone, would-be home buyers see high prices as a deterrent, not as an incentive to recklessly jump into the market.

Prior to the housing bust, house prices on a national level had not fallen in over 80 years. Even in California where house prices had fallen on...
The surprising change in buyer behavior caused by the housing bust

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Test Post from OC Housing News

Test Post from OC Housing News http://ochousingnews.com/blog

OCHN: The hidden perils of lender policies that suppress housing supply

Saving the banks required reflating the housing bubble, trapping a generation in their starter homes and slowing sales in the housing market.

The reason fewer homeowners than usual list their homes for sale is due primarily to loss mitigation policies at lending institutions. Many homeowners...
The hidden perils of lender policies that suppress housing supply

OCHN: Lenders destabilize housing with failed bubble-era loan products

With memories of the housing bust fading, lenders embrace loan products proven to destabilize housing markets and cause foreclosures and lender losses.


One of the main factors preventing further home price inflation is the lack of down payment savings among the buyer pool. With super low...
Lenders destabilize housing with failed bubble-era loan products

OCHN: The hidden, long-term benefit from the housing bust

Thanks to the housing bust, suburban renters now enjoy a much better selection of houses and neighborhoods to suit their family’s needs.

People often complain the media focuses too much on doom and gloom. Despite this perception, the financial media is almost entirely focused on providing...
The hidden, long-term benefit from the housing bust

OCHN: Forget austerity, housing and the economy need more stimulus

Proponents of austerity predicted a number of dire consequences for fiscal stimulus, but so far, none of them have come to pass.

Have you ever been completely certain about something only later to find out you were completely wrong? Most people won’t admit it, and many people fail to...
Forget austerity, housing and the economy need more stimulus

OCHN: Root cause of California"s housing problems is homeowner greed and hypocrisy

The worst social problem in the most heavily Progressive-dominated political districts is a lack of housing caused by selfishness and greed, two characteristics hypocritical Progressives like to criticize Conservatives for.

California has a housing problem. Anyone who lives in California copes...
Root cause of California"s housing problems is homeowner greed and hypocrisy

OCHN: You pay for failed mortgage innovations with your taxes and your home

When the mortgage industry innovations fail, millions of people lose their homes, and taxpayers fork over billions in bailout aid to foolish lenders and foolish borrowers.

Financial innovation:
Designing a loan program that borrowers won’t repay but lenders and investors will fund.
Most...
You pay for failed mortgage innovations with your taxes and your home

OCHN: We"ve reached a permanently low floor in mortgage interest rates

Mortgage rates will remain low because the banks and the economy can’t accommodate the loss of sales and lower house prices bound to accompany higher rates.

“Stock prices have reached what looks like a permanently high plateau.”
– Irving Fisher, Ph.D. in economics, Oct....
We"ve reached a permanently low floor in mortgage interest rates

OCHN: Politicians designed a future crisis to facilitate mortgage finance reform

Politicians intentionally set up Fannie Mae and Freddie Mac to fail so they could reform mortgage finance without fear of voter backlash.

You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.
Rahm...
Politicians designed a future crisis to facilitate mortgage finance reform

OCHN: States struggle to help Millennials screwed by inflated house prices

Since high home prices can no longer be overcome by financial innovations in lending, state and local governments are trying their own market manipulations to sustain inflated home prices.

The federal reserve’s zero interest rate policy is fraught with unintended financial consequences. The p...
States struggle to help Millennials screwed by inflated house prices

OCHN: Scummy payday lenders bought the support of Democratic Party Chair

Lobbyists for payday lenders gained the support of the Chair of the Democratic Party in their efforts to rip off the poor and keep them in debt servitude.


Many lenders are contemptible scum, particularly those who make consumer loans to poor people. Payday lenders are the worst of the worst....
Scummy payday lenders bought the support of Democratic Party Chair

OCHN: Raising minimum wage enriches landlords in low-supply housing markets

Competition for limited housing stock will prompt low-income workers to allocate any pay raises to securing better housing, enriching landlords.

Advocates for raising the minimum wage have lofty aspiration. Many working-class Americans barely make ends meet earning minimum wage — and some...
Raising minimum wage enriches landlords in low-supply housing markets

OCHN: Homebuilders painfully transition from move-up sales to entry-level market

Homebuilders change their focus from move-up to entry-level buyers as sales wane in the move-up market and more Millennials buy entry-level homes.


Homebulders typically provide product for all levels of the housing market. However, after the housing bust, most homebuilders completely abandoned...
Homebuilders painfully transition from move-up sales to entry-level market

OCHN: Conforming loan limits inhibit higher home prices

Conforming loan limits create intense buyer competition at under-limit prices and restrict home price increases need to bail out underwater borrowers.

The FHA and the GSEs exist to provide subsidized mortgages to lower- and middle-income Americans. The conforming loan limit is put in place to...
Conforming loan limits inhibit higher home prices

OCHN: Story of a self-reliant Gen-Xer’s first time home purchase

We’ve all read stories about the challenges first-time homebuyers face in today’s market. First-time homebuyer participation is hovering near 30-year lows, and showing little sign of improvement. Rather than describe the effects in another post, I thought it would be informative to...
Story of a self-reliant Gen-Xer’s first time home purchase

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

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

With Donald Trumps wins in the Super Tuesday primaries, it’s looking increasingly like he will be the Republican nominee in 2016. Today I repost the...
Why Donald Trump will be the next President of the United States (redux)

OCHN: Will banks can-kick bad loans for as long as it takes?

All delinquent borrowers living in properties worth less than the outstanding balance of the loan will be offered a loan modification in lieu of a foreclosure because the banks can’t absorb the losses.

Prior to the housing bust, lenders always foreclosed on delinquent borrowers — always. T...
Will banks can-kick bad loans for as long as it takes?

OCHN: What would need to happen to increase for-sale home inventory?

For the missing MLS inventory to return to the market, borrowers need debt forgiveness, and house prices need to move even higher.

The financial media inundates us with stories about the “problem” of low MLS inventory that supposedly holds back first-time homebuyers, who are buying...
What would need to happen to increase for-sale home inventory?

OCHN: US housing market finds strength in the eye of a financial hurricane

The US housing market starts 2016 with a strong economy, low unemployment, improving wage growth, and very low mortgage rates: A recipe for strong sales and price increases.


The US Housing market is poised for a strong start in 2016. The underlying economy was strong enough for the federal...
US housing market finds strength in the eye of a financial hurricane

OCHN: San Bernardino County Housing Market Report: February 2016

IRVINE, Calif., February 1, 2016 – OC Housing News
San Bernardino County Housing Market Report: February 2016
Historically, properties in this market sell at a 25.7% discount. Today’s discount is 31.4%. This market is 5.7% undervalued.
Median home price is $279,600 with a rental parity v...
San Bernardino County Housing Market Report: February 2016

OCHN: The invisible force building wealth across America

Today’s homeowners are paying down mortgage faster than ever before as rapid loan amortization builds wealth across America.

Which is better for accumulating equity, lower prices or lower interest rates? Both lower the monthly cost of ownership and result in more disposable income....
The invisible force building wealth across America

OCHN: Should evictions be banned to stop hurting people"s feelings?

Some foreclosure and eviction cases can be heartbreaking. However, we live by rule of law in this country, and unless we want to start giving away real estate to those with the saddest story, these evictions must take place.

Property evictions cause severe emotional pain for the dispossessed....
Should evictions be banned to stop hurting people"s feelings?

OCHN: The secret financial strategy only the wealthy and prudent follow

Paying off debt early is a far superior long-term financial plan than continually adding to mortgage debt to support an extravagant lifestyle.

Most people believe they achieve the American Dream when they buy a house, but most often they only buy 3.5% to 20% of a house, not the whole thing....
The secret financial strategy only the wealthy and prudent follow

OCHN: Land contract sales: helping the poor, or screwing them?

Land installment contracts provide a viable path to homeownership, but they are fraught with abuse.

In yesterday’s post, Three calculations every real estate investor must know, I discussed my personal criteria for buying rental investment properties. Everyone who actively invests has...
Land contract sales: helping the poor, or screwing them?

OCHN: Three calculations every real estate investor must know

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...
Three calculations every real estate investor must know

OCHN: Riverside County Housing Market Report: February 2016

IRVINE, Calif., February 2, 2016 – OC Housing News
Riverside County Housing Market Report: February 2016
Historically, properties in this market sell at a 18.5% discount. Today’s discount is 23.5%. This market is 5.0% undervalued.
Median home price is $305,500 with a rental parity value of ...
Riverside County Housing Market Report: February 2016

OCHN: OC Homebuilders see flat pricing as best-case scenario

Analysts working for homebuilders see a flat market with weak sales as the likely future for OC Homebuilders.


At first low MLS inventory was a boon to homebuilders, but housing market manipulations give homebuilders false signals, so Orange County homebuilders oversupplied the market, and as...
OC Homebuilders see flat pricing as best-case scenario

OCHN: Top five secret reasons to use FHA financing

Most borrowers don’t realize the hidden benefits of using FHA financing they can use to game the system to their advantage.

Most first-time homebuyers use FHA financing because they lack better alternatives. FHA insured loans carry weak qualification standards (they accept FICO scores...
Top five secret reasons to use FHA financing

OCHN: Manipulating for-sale home supply succeeded wildly for bankers

Reducing the number of homes for sale was the essential ingredient to bail out bankers and loanowners whose foolish behavior caused the housing bubble.

From early in the housing bust, I knew that how the banking cartel disposed of their REO would determine the fate of the housing market. Since...
Manipulating for-sale home supply succeeded wildly for bankers

OCHN: San Francisco housing bubble 4.0

The housing bubble in San Francisco is the fourth unsustainable price rally in the last 45 years. The only question is when the correction will happen and how deep it will go.

In the ashes of the first technology bubble, the term web 2.0 was coined to describe the new and improved mania...
San Francisco housing bubble 4.0

OCHN: Collapsing stock market may spawn a huge rally in real estate

Investors move out of stocks and into safe investments like government-backed mortgages, lowering rates and increasing housing demand.

For the last several years, the real estate market observers awaited the imminent rise in mortgage rates sure to trigger a price crash. While the spike from...
Collapsing stock market may spawn a huge rally in real estate

OCHN: Get up to 1.5% cash back at Irvine Eastwood Village Grand Opening

Do you want free money? 
If you buy a home from a homebuilder without an agent, you pay full price.
If you buy a home with us as your agent, you get 1.5% back.
Same house, but 1.5% of the purchase price refunded back to you.
It’s free money! Take it! 
As a bonus, you get full agent rep...
Get up to 1.5% cash back at Irvine Eastwood Village Grand Opening

OCHN: Is home ownership a privilege or an entitlement?

Though realtors and politicians like to present home ownership as an entitlement, it’s really a privilege bestowed on those who can sustain it.


We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,...
Is home ownership a privilege or an entitlement?

OCHN: Will a devalued Chinese Yuan crush new home sales in Orange County?

As the Yuan declines in value, houses become increasing expensive to Chinese Nationals, prompting further erosion of new home sales to this large buyer group.

Last month I asked Will the slowdown in China hurt Irvine real estate? There is little doubt that stopping the flow of Chinese capital...
Will a devalued Chinese Yuan crush new home sales in Orange County?

OCHN: A housing bear mauls Las Vegas

House prices should continue to rise in Las Vegas as cloud inventory supply restrictions and undervalued conditions persist.

Back in 2010 when house prices were crashing, I advised people to buy Las Vegas real estate because I believed it was a good value. With house prices at 1995 levels, even...
A housing bear mauls Las Vegas

OCHN: Is pent-up housing demand real or a realtor fantasy?

Some normal housing demand was delayed to the recession, but no great influx of demand is likely forthcoming.

Pent-up demand is the idea that many, many more people would participate in a financial market if some temporary barrier were removed, a barrier currently preventing them from...
Is pent-up housing demand real or a realtor fantasy?

OCHN: HELOC abuse rising along with house prices

As house prices rise and more homeowners possess equity again, some are withdrawing this money at low rates and spending it, stimulating the economy.

During the housing mania, people bought homes because house prices rose rapidly, and lenders gave equity to homeowners at 100%+ of the value set...
HELOC abuse rising along with house prices

OCHN: Get up to 1.5% cash back on a Portola Springs new home

Do you want free money? 
If you buy a home from a homebuilder without an agent, you pay full price.
If you buy a home with us as your agent, you get 1.5% back.
Same house, but 1.5% of the purchase price refunded back to you.
It’s free money! Take it! 
As a bonus, you get full agent rep...
Get up to 1.5% cash back on a Portola Springs new home

OCHN: Surprising way rising mortgage rates harm existing homeowners

Higher mortgage interest rates will reduce future demand. Today’s homeowners will not experience the home price appreciation enjoyed by the previous generation.

Many would-be homeowners rush to the market to lock in low mortgage rates out of fear of being priced out forever. They fear...
Surprising way rising mortgage rates harm existing homeowners

OCHN: Will beach community home ownership premiums increase without end?

Coastal community real estate is more expensive relative to rent than it’s ever been. A bubble perhaps?

Very expensive real estate dominates Coastal California communities. The narrow strip of land within a mile or two of the ocean is one of the most desirable climates in the world, and...
Will beach community home ownership premiums increase without end?

OCHN: What is the best financial reason to buy a home? (Hint: it"s not what most think)

Contrary to popular belief, capturing home price appreciation is not the best financial reason to own real estate.


Many people want to own their homes because they believe the property will rapidly go up in value, providing them an endless stream of free money they can spend on anything they...
What is the best financial reason to buy a home? (Hint: it"s not what most think)

OCHN: Free real estate seminar at 5:30 on February 4, 2016 at JT Schmids Restaurant in Tustin, CA

The Dan Hrey Group, the Everyday Luxury Group, and the OC Housing News are teaming up to provide a free real estate seminar on February 4, 2016 at JT Schmids Restaurant in Tustin, CA.
IRVINE, Calif., January 31, 2016 – On February 4, 2016, The Dan Hrey Group, the Everyday Luxury Group, and the O...
Free real estate seminar at 5:30 on February 4, 2016 at JT Schmids Restaurant in Tustin, CA

OCHN: Do Americans possess healthy shame concerning consumer debt?

A majority of Americans hold a healthy disdain for consumer debt, but most carry debt anyway.

When you see an American Express Card commercial, do you see a sophisticated financial manager or an irresponsible spendthrift? The credit card companies want you to see a savvy money manager who...
Do Americans possess healthy shame concerning consumer debt?

OCHN: Many homeowners downsize when released from their bubble-era debtor"s prison

After enduring 10 years of excessive mortgage debt service, many people downsize when prices rise high enough for them to sell.


Most people visualize the housing ladder as a steady upward progression from starter home to Mansion by the beach, but that’s seldom the reality. Many people...
Many homeowners downsize when released from their bubble-era debtor"s prison

OCHN: House prices could fall and the cost of home ownership could still go up

Lower house prices due to higher mortgage rates still result in a higher cost of home ownership.

Everyone shopping for a home wants to see lower prices. For most products, paying less for it means the buyer has more money available to purchase other goods and services, but with houses this...
House prices could fall and the cost of home ownership could still go up

OCHN: Is pessimism about housing warranted?

Without rational pessimism, people are susceptible to foolish optimism that fuels financial manias.

Optimists are happier than pessimists. If you spend your life seeing the good in people, situations, and outcomes, you live in an inner world of bliss, contentment, and exciting possibilities. If...
Is pessimism about housing warranted?

OCHN: Millions of homeowners trapped in entry-level homes for over a decade

With housing markets only now reaching the peak of the housing bubble, many have been trapped in their homes for over 10 years.

In 2005 most people who bought their first homes believed they won the lottery. In the five preceding years, house prices more than doubled, and since most people...
Millions of homeowners trapped in entry-level homes for over a decade

OCHN: Why do politicians want foreign investment in real estate?

Foreign investment costs politicians nothing, and it provides them tangible and taxable assets.


Have you ever gone to an Irvine new home model center and seen buses of foreign tourists on a shopping spree? I have, and I suspect many others have seen the same thing. Anecdotally, Irvine...
Why do politicians want foreign investment in real estate?

OCHN: The most important key to avoid overpaying for a house

A willingness to walk away from any negotiation is essential to avoid overpaying for a house, or anything else for that matter.

Negotiating the sale of residential real estate should be no more difficult than negotiating the sale of any other product or service without a fixed price; however,...
The most important key to avoid overpaying for a house

OCHN: New York bankers preserved their own home values while crushing others

New York bankers refused to foreclose on properties in New York city to preserve the housing values in their own neighborhoods.

As Bernie Sanders recently pointed out, a cadre of major banks in the United States issue more than 35% of all home mortgages, and when you consider how many they...
New York bankers preserved their own home values while crushing others

OCHN: Affordable housing requires more construction and more foreclosures

Since affordable housing is opposed to the interest of existing homeowners, policies which would truly improve affordability are shunned in favor of ineffective alternatives.

Most people in California suffer from higher housing costs than the rest of the US, putting major pressure on...
Affordable housing requires more construction and more foreclosures

OCHN: Does Coastal California’s great climate create real estate value?

Many wealthy and powerful people make Coastal California their home because of the weather, and they build companies and stimulate the economy.

The local climate in Coastal California contributes to real estate value, but not because everyone wants to live here. By far the largest reason...
Does Coastal California’s great climate create real estate value?

OCHN: US cracks down on money laundering in real estate

By forcing owners of shell corporations to reveal their identities, US officials will slow the flow of illicit money into high-end real estate.

People who make money outside the legal financial system have a problem. If they want to put their money back into legal circulation without exposing...
US cracks down on money laundering in real estate

OCHN: California will always have a problem with homelessness

Good climate, good services, and a chronic shortage of housing combine to create an intractable problem with homelessness in California.






What is the minimum level of housing quality people are entitled to? If you pose that question to Coastal California residents, many will cite their...
California will always have a problem with homelessness

OCHN: Mortgage interest rates may not go up, housing may prosper in 2016

The federal reserve raised the federal funds rate, but that doesn’t mean mortgage interest rates must rise.


The future of housing in inexorably tied to the course of mortgage interest rates. If mortgage rates remain below 4.25%, both house prices and sales volumes will be higher in 2016...
Mortgage interest rates may not go up, housing may prosper in 2016

OCHN: Bernie Sanders bashes too-big-to-fail banks

In a recent speech, Bernie Sanders unapologetically bashed the too-big-too-fail banks. He’s a rare breed: an honest politician.

I recently wrote that Donald Trump will be the next President of the United States due to his populist appeal. However, for people like me who really want to see...
Bernie Sanders bashes too-big-to-fail banks

OCHN: Will the slowdown in China hurt Irvine real estate?

A rising US dollar makes Irvine homes much more expensive for Chinese buyers, and capital controls makes it much more difficult to move money out of China for those inclined to do so.


Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home...
Will the slowdown in China hurt Irvine real estate?

Housing Market: Expect years of low sales volumes in residential real estate

At this point we can be certain that banks are going to avoid or delay foreclosure or short sale until prices rise so they don’t have to lose money on the sale. They have no choice. With banks still exposed to $1 trillion in unsecured mortgage debt, they simply can’t take the losses...
Expect years of low sales volumes in residential real estate

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