Archive for December, 2016

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 virtues of walking in urban cores. Unfortunately, much to their chagrin, the buying public disagrees with them. Builders provide what buyers in the market demand. Visionaries may wish demand were different, and some want to force the market to bend to their wishes, but for most of the last 70 years, the buying public demanded a detached single-family house on a large lot. This may be about to change. Buyers preferences won’t change. Despite the concerted efforts of urban…[READ MORE]

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, many unqualified borrowers entered the buyer pool and ultimately defaulted on their mortgages, leading to millions of foreclosures. The disaster was exacerbated by the proliferation of Option ARM loans that both inflated house prices and masked the problems with borrower's ability to repay with teaser rates and negatively amortizing payments. When these loans caused all borrowers (not just subprime) to implode, crashing house prices took down the economy and millions of qualified and unqualified borrowers along with it. When so…[READ MORE]

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