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