Wednesday, August 31, 2016

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/

Tuesday, August 30, 2016

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/

Monday, August 29, 2016

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/

Friday, August 26, 2016

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/

Thursday, August 25, 2016

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/

Wednesday, August 24, 2016

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/

Tuesday, August 23, 2016

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/

Monday, August 22, 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/

Friday, August 19, 2016

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/

Wednesday, August 17, 2016

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/

Tuesday, August 16, 2016

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/

Monday, August 15, 2016

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/

Friday, August 12, 2016

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/

Thursday, August 11, 2016

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/

Wednesday, August 10, 2016

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/

Tuesday, August 9, 2016

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/

Monday, August 8, 2016

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/

Friday, August 5, 2016

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/

Thursday, August 4, 2016

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/

Wednesday, August 3, 2016

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/

Tuesday, August 2, 2016

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/

Monday, August 1, 2016

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/