Archive for November, 2013

Banks around the globe face the same perils as those in the United States. Housing bubbles inflated in many countries during the 00s, and the banks that provided the cheap debt find themselves dangerously exposed to losses. The only way lenders can save themselves is to reflate the housing bubbles so they can liquidate their bad loans and recover their capital. The same dynamic that prompted US officials to coordinate with lenders to reflate a housing bubble is at work overseas. What can California can learn from Britain’s housing bubbles? I've been reporting over the last few months that house prices in Coastal California have reflated back to historic levels of affordability. We aren't in a bubble yet, but if…[READ MORE]

In 2005 a house was an investment you could live in. A house was expected to provide endless rapid appreciation that could be converted to spending money at any time. Debt on the house could always be increased yet refinanced at lower and lower rates and better and better terms so payments wouldn't go up. Further, the owner would never actually have to repay the debt as the house was expected to cover all debts when it sold. With such blissful and fallacious thinking, a housing bubble was inevitable. The housing bust revealed nearly every homeowner belief and attitude was a fantasy. House prices did not always increase rapidly. In fact, they could decline rapidly as well. The debt could…[READ MORE]

[gview file="" height="750px" width="580px" save="1"] One of the functions of this blog is to provide timely housing market information to buyer and sellers. Until recently, I could only provide good data and analysis for Orange County, but I've recently expanded my coverage area to include Los Angeles, Ventura, Riverside, and San Bernardino counties. If you've been reading this blog for a while, you will recognize the standard data analysis techniques and presentations in today's post. Since all housing markets in Southern California are related, some of this analysis may be redundant, but there are significant differences between these markets that are worth exploring. I intend to do more of these posts covering other aspects of the housing market in the…[READ MORE]

The current housing market is now testing 50% investor participation levels on closed sales. Maybe soon the market will test 55% or 60% investor participation levels.  According to this article below, all cash sales are being classified as institutional investors because rarely owner occupied sales are done with all cash which some exception of course.  However, investor purchases are negating the affect of lower rates by increasing home prices.   Lower rates are helping the banks, loan modification programs, and local governments to collect tax revenues, but lower rates are not helping the first time home buyers.  In fact, the trade up home buyers are not doing much better.  Enter the cash investor. Nearly 50% Of All Home Sales Now…[READ MORE]

Many politicians and advocacy groups lobbied for principal reduction for underwater borrowers. This was the preferred solution among loanowners because it was giving them free money and removing any consequences for their ill-timed purchase or refinance. Principal reduction was not favored by lenders or taxpayer watchdog groups because either the lender or the government was going to pay the price for trillions of dollars in principal reductions. The compromise solution was loan modification. The early efforts at loan modifications largely failed because far too many people were given debts they couldn't manage during the housing bubble, and they didn't qualify for new loans everyone knew were going to go bad. Over the course of three years from October 2008 when…[READ MORE]

Monthly Housing Report

In Memoriam: Tony Bliss 1966-2012