Archive for July, 2013

The National Association of realtors is dedicated to advancing the interests of listing agents who dominate the organization. Their primary focus is to generate real estate sales and commissions that provide income for its members. It spends enormous sums promoting real estate sales with the mantra, "it's a great time to buy or sell a home." The problem with this singular focus and approach is that it is not always a good time to buy or sell a house. realtors want to pass themselves off as experts on real estate whose advice can be relied upon by market participants. However, realtors have no interest in whether or not it truly is a good time to buy or sell because for…[READ MORE]

All parties in the housing industry are examining the latest data since the sharp increase in mortgage rates.  Industry experts, CEO's, and Banks are all giving their opinion on what the impact of the best increase in mortgage rates since 1987 will do the market.  However, this is just guess work and housing data will be used to gauge the impact of mortgage rates.  Two of the most important figures are the housing supply and number of purchase applications, basic supply and demand measurements. Housing sees a slight slowdown as inventory grows 7/2/13 11:32am The U.S. housing market is seeing a slight slowdown, according to the latest market report from Redfin, which ranks 22 markets across the country by the…[READ MORE]

Home equity is needed to keep housing markets stable. First, people with equity have a financial stake in sustaining home ownership. It was the plethora of no-money-down mortgages that prompted so many to strategically default. People simply don't walk away from their financial obligations if they have an equity stake. They may sell to get their cash, but they won't strategically default as long as they have something tangible to lose. Further, home equity provides a buffer for lenders. If due to an economic downturn prices should fall and borrowers default on their mortgages, the cushion of equity provides room for prices to move without exposing the banks to potential loss of original loan capital. If we had high down…[READ MORE]

Fourth of July is a celebration of freedom and independence. Unfortunately, from what I've observed, many people have forgotten what those words mean. Today I am revisiting a post from 2010 on this subject to remind everyone of the precious thing the banks are taking from us all. Housing Subsidies, Debt Expansion, and the Death of American Liberty Properties are encumbered with too much debt, and buyers in markets where prices have not crashed are being asked to pay much higher prices as a percentage of their incomes than generations past. Today's buyers are being asked to pay for the excesses of those that came before them and sell out to the money changers. Mom, Apple Pie and Mortgages By…[READ MORE]

When mortgage interest rates spike suddenly, many buyers move away from fixed-rate mortgages to adjustables because the interest rate is more favorable, and ARMs allow them to complete the purchase they negotiated before the rates went up. As one might expect, the sudden increase in rates from 3.5% to about 4.3% is causing people to take the 3.5% ARMs. Most don't recognize the danger this creates. Over the last 30 years of steadily declining interest rates, buying a house with an ARM didn't create any long-term problems. Many buyers just waited for rates to go back down and refinanced into a fixed-rate mortgage. Some kept their ARM because the steadily dropping rates kept making their payment lower. Almost nobody recognized…[READ MORE]

When people get greedy or desperate, they sometimes do foolish things. A recent LA Times article detailed the atrocious behavior of two landlords -- a realtor and her husband -- who terrorized tenants to induce them to move out so the landlords could make a quick buck. They cut holes in the floor, destabilized the structure, shut off the power and gas, and anything else they could think of -- all in pursuit of money. The realtors who are the subject of today's featured article were also motivated by money to commit some very foolish acts. They were trying to sell their million dollar house, but their next-door neighbor also decided to sell. They know the buyer pool at those…[READ MORE]

The conventional wisdom is that fence-sitting buyers buy homes in reaction to rising interest rates for fear of being priced out of the housing market. In the past, this has often been the case, mostly because realtors use this scare tactic to generate quick commissions. However, with the credibility of the realtor community at zero, and with so few fence-sitting buyers, the impact will not be to increase buying this time around. I wrote recently that surging mortgage rates may scare sellers into action. This isn't the irrational fear of realtors stoking the market, but a very rational realization that the sellers market can't get any better than it is today, and if sellers don't take advantage now, they may…[READ MORE]

In Memoriam: Tony Bliss 1966-2012