Archive for 2015

The move-up market will not get the hoped-for boost from the reflated housing bubble because the move-up equity flowed instead to the banks. In past real estate boom and bust cycles, lenders were forced to write down bad loans, foreclose on the houses, and liquidate their inventory for whatever they could get -- which is why the bust nearly always overshoots fundamentals to the downside. This time around, the problem was so severe that following the market-cleansing process of the past would have displaced another 10 million families and bankrupted the banking system, so another solution was implemented: lenders kicked the can with loan modifications. The short-term, visible effect of this solution was that millions of borrowers stayed in homes…[READ MORE]

The Republicans are correct and appropriate to point out that the policies of the GSEs have potential to put the American taxpayer at risk. Nobody wants to see a repeat of the previous housing bubble. Lenders, loanowners, and the politicians that pander to them all celebrate the reflation of the old bubble, but they hope it's done on stable terms this time around to prevent a major crash. In the aftermath of the housing bust, lawmakers correctly identified the causes of the housing bubble and crafted the Dodd-Frank law to restrict or ban the lending practices that lead to the housing bubble. Interest-only and negative amortization loans are restricted (effectively banned) because these loans don't qualify for the safe-harbor provisions…[READ MORE]

Rising mortgage rates will reduce sales volumes on new construction and prompt builders to offer more incentives and prevent them from raising prices. Homebuilding usually leads the economy out of recession. The Great Recession did not end with a building boom largely because of overbuilding during the housing bubble. A false price signal triggered excessive homebuilding, and it took five years to work off the inventories. The collapse of the housing bubble saw new home sales and construction fall to the lowest levels ever recorded — and those records go back to the 1960s. To make matters worse, rather than experiencing a sudden drop and a “V” bottom leading to a new boom, new home sales flat-lined at record lows…[READ MORE]

Consumer Financial Protection Bureau launched a controversial mortgage interest rate checker to protect customers from rate-gouging lenders. The more information consumers have, the better decisions they make. When I launched the new system on this site that provides detailed cost of ownership information, I did that to provide consumers more information of higher quality than they can find elsewhere to help them make better housing decisions. One of the important decisions people have to make when house shopping is which lender to use for the transaction (assuming they aren't paying cash). Many people don't shop their lenders, and as a result, they end up paying higher interest rates or endure higher fees. The much-maligned Consumer Financial Protection Bureau developed a…[READ MORE]

Several factors could weaken the market, but the forced repatriation of foreign investment has the potential to really flatten house prices. With mortgage interest rates dropping below 4%, and with an improving economy, the housing market starts 2015 with a small boost as compared to the dismal beginning of 2014. Hopefully, this year the pundits won't feed us bullshit about the weather. This year may show improvement in housing sales and prices over 2014 if the economy continues to create new jobs and if wages begin to rise. However, a number of factors could weaken housing in 2015 and turn the hopeful start into yet another disastrous year of steady disappointment and endless pundit excuses. What could derail the housing…[READ MORE]

Historically, properties in this market sell at a 18.5% discount. Today's discount is 22.9%. This market is 4.4% undervalued. Median home price is $290,800 with a rental parity value of $381,600. This market's discount is $90,800. Monthly payment affordability has been improving over the last 6 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $165/SF to $165/SF. Resale prices have been rising for 1 month(s). Over the last 12 months, resale prices rose 8.7% indicating a longer term upward price trend. Median rental rates increased $0 last month from $1,697 to $1,698. The current capitalization rate (rent/price) is 5.6%. Rents have been rising for 7 month(s). Price momentum signals rising rents over the next three…[READ MORE]

Established fund with fully-rented properties is reopening for investment. A number of investors have asked to redeem their shares in my Las Vegas fund. Rather than sell properties, I am looking for replacement investors to take their place. Expected 8% to 10% yearly returns; 4%-5% cash, 4%-5% appreciation. 2014 returns were 11.5%, 2013 was similar. $10,000 minimum. Radiant Homes II Disclosure Document Radiant Homes II Questionnaire Radiant Homes II Subscription Agreement Contact Larry Roberts at [email protected] or 949-351-6913 for more details.[READ MORE]

The US needs to rethink it's policies toward home ownership and housing subsidies. Some are suggesting Obama's silence signals a radical change. Every presidential administration of the last 100 years has promoted home ownership. The ideal of homeownership has become so sacrosanct that we never abandon this ideal even when the policies it spawns turn out disastrous. Instead, we clean retool our policies, pretend they weren't a failure, and begin work on the next housing catastrophe. We have a long history of supporting home ownership. When the 1920 census revealed a small dip in ownership rates since 1910, from 45.9 percent to 45.6 percent of all households, Herbert Hoover, as secretary of commerce, initiated the first major Washington campaign to boost…[READ MORE]

Homebuilders believe the feel-good nonsense printed in trade journals and industry media outlets and often rely on this information to make bad decisions. "Freedom is the right to tell people what they do not want to hear." George Orwell As someone who worked in the homebuilding industry for over 20 years, I often drank housing kool-aid with my co-workers. Although I remained grounded enough to see the obvious housing bubble of the 00s, many of my co-workers refused to acknowledge it, sometimes with heated arguments. The homebuilding industry, like many others, has it's own trade journals and industry news aggregators that keep people informed on happenings that impact the everyone who makes a living from home construction. But rather than…[READ MORE]

Mortgage insurers have the right to collect from former homeowner on losses the mortgage insurer incurred in a foreclosure. Whenever a purchase or refinance transaction amount exceeds 80% of the value of a property, the lender will force the borrower to purchase private mortgage insurance -- not for the borrower's benefit, but for the banks benefit. It's widely known that lenders can go after former homeowners for losses incurred in a foreclosure, but what's less widely known is that mortgage insurers can do the same thing. Many former homeowners are finding out the hard way. Homeowners billed for houses lost in foreclosure By Jenifer McKim and Jess Aloe New England Center for Investigative Reporting, January 18, 2015 When Guillermo Galindo…[READ MORE]

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