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Author Archive: Irvine Renter

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 that define the quality of everyday life. Without the changes to the land required by our built environment, we would still be living in caves trying to subsist off the land like our stone-age ancestors. However, too much of a good thing can be as bad as too little of it. When real estate development is done poorly, or when every last trace of the natural environment is eliminated in favor of the built environment, quality of life suffers. There is…[READ MORE]

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 the controlling hands of Chinese government officials. As a result of this perception, Chinese investors buy a significant number of homes in Irvine -- anecdotally, Chinese Nationals buy 80% of properties in some new home communities. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up. Chinese capital is an unstable source of investment, and it…[READ MORE]

Self-driving cars will impact home design and community design of the future, but it won't be the big disruption to real estate values some imagine. Transportation systems provide access to property and facilitate commerce. Automobile road systems in particular take up tremendous amounts of real estate, and roads define the patterns in real estate development. Further, the need for cars adds 400 square feet or more to our houses that's largely useless as living space. But what happens if our relationship with the car changes? How does this impact housing or land development? Over the last few years as engineers make progress toward self-driving cars, many armchair futurists imagined what a world of driverless cars would look like. Most visions…[READ MORE]

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 up faster than wages, who benefits, and who pays the price? Most people accept the idea that ever-rising house prices are good, and that a decline in house prices is bad. This idea seems to only apply to housing because ordinarily people cheer when the price of an essential product goes down, and complain when it goes up. Why is housing so different? Gasoline prices over the last few years yo-yoed between…[READ MORE]

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 incomes. When house prices start moving up even when fundamentals don't support the move, speculators take notice. When speculators become active, they add to demand, pushing prices higher, potentially fueling a market mania. For many years, the astute observations on this site were very bearish -- and with good reason. Once the market bottomed, most of the bears went into hibernation, and the comments remained more objective and balanced for a few years.…[READ MORE]

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 sustained, most people don't know or believe that. In fact, most people who bought late in the rally extrapolated the short-term rally to infinity. They really believed they were going to make a fortune, and all their dreams were coming true. It didn’t work out that way. Only the strongest markets across the country are back above the housing bubble peak. Late buyers and refinancers who used amortizing loans and consistently…[READ MORE]

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 homes at the worst possible time. Unlike many markets where only the most indebted late buyers and HELOC abusers have been washed out by falling prices, in Las Vegas, prices have fallen so low that ordinary buyers from before the bubble who paid down their mortgage find themselves deeply underwater, unable to move, and hopeless. Those owners are the true victims of the housing bubble because they…[READ MORE]

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 on renters for income, and many of those renters are Millennials. My parents aren't unique among Boomers. They both worked for the school system and made a modest but comfortable living up through their early retirement at 62. They fit the profile of a typical mom-and-pop rental property investor: they were older, established, and had enough savings and income to complete the deal. Most people that fit that…[READ MORE]

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 communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up. The only realistic scenario where aggressive sellers enter the market and push house prices lower is if Chinese Nationals reverse the flow of money by liquidating their US holdings to cover financial obligations back home. To really precipitate a…[READ MORE]

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 with a strong sense of community. The goal of bureaucrats and lawmakers is to create a mythical society with 100% homeownership. The powers-that-be consistently promote homeownership, sometimes with costly subsidies with little or no real benefit. Every homeowner wants to see the resale value of their home go up as rapidly as possible, and since most local governments obtain revenue from real estate taxes, government officials like high home prices too. Since more than half the country owns…[READ MORE]


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In Memoriam: Tony Bliss 1966-2012