Author Archive: Irvine Renter

When borrowers and lenders petition the government for relief through debt forgiveness and bailouts for losses, you are the one paying for whatever the borrower did with that money; the government is merely a middleman facilitator of a tax heist. In a bygone era, lenders lost money if they made bad loans to irresponsible borrowers. With the advent of securitization, much of this risk of loss transferred to investors, and with the economic catastrophe of 2008, lenders learned the government would bail them out for any losses they were unable to pass on to investors. The too-big-to-fail banks no longer attempt to conceal the moral hazard behind their actions; they know they will be bailed out, so they act accordingly.…[READ MORE]

The housing bubble pulled forward a generation of buyers; the housing bust cost these buyers their homes and their good credit, removing many of them permanently from the housing market. Lenders succeeded in manipulating market prices by restricting supply; however, for a true recovery in housing, the market requires resurgent demand from first-time homebuyers and move-up buyers. These two groups are typically the largest source of housing demand, with the first-time homebuyer the bedrock of the housing market; without first-time homebuyers, no move-up market exists. The first-time homebuyer market propels upward by job growth and household formation; when the economy is strong and creating good-paying jobs, young people form new households and use their new income to bid for real…[READ MORE]

What separates homeowners from people who don’t own homes? The answer is not as simple as you might think. If you go back to antiquity, the person who “owned” a house was generally the strongest warrior who was capable to taking it and holding it against all rivals. Over the last 500 years the development of government and stable laws of land ownership made it possible for ordinary people to have claims to real property stronger than the edge of a sword or the barrel of a gun. One of the first attempts to establish property title was the English Doomsday Book of the 11th century. The King set out to establish who owned what so he could better establish…[READ MORE]

If Dodd-Frank were repealed as Republicans want, the end result would likely be another housing bubble. Financing terms largely determine the equilibrium price for housing. Short term fluctuations in supply and demand cause gyrations, but over time the amount potential buyers can borrow will determine what houses cost. For example, the reason prices are going straight up right now is because potential buyers can borrow large sums due to very low interest rates. The activities of these buyers coupled with a depleted MLS inventory is causing prices to rise. Prices will continue to rise until potential buyers reach the limits of their borrowing power or new supply comes to the market. Banks are intent on the former outcome. House prices…[READ MORE]

San Diego Housing Market Value & Trends Update Historically, properties in this market sell at a 14.2% premium. Today's discount is 0.5%. This market is 14.7% undervalued. Median home price is $528,500, and resale $/SF is $335/SF. Prices rose 6.7% year-over-year. Monthly cost of ownership is $2,426, and rents average $2,454, making owning $028 per month less costly than renting. Rents rose 5.3% year-over-year. The current capitalization rate (rent/price) is 4.5%. Market rating = 10 Carlsbad Housing Market Value & Trends Update Historically, properties in this market sell at a 38.4% premium. Today's premium is 12.1%. This market is 26.3% undervalued. Median home price is $769,700, and resale $/SF is $367/SF. Prices rose 6.3% year-over-year. Monthly cost of ownership is…[READ MORE]

Recent reports show an uptick in mortgage equity withdrawal. Is this history repeating itself, or did people learn the wrong lessons from the housing bust? Money won’t buy happiness, but it can provide the finest forms of misery. Everyone wants money. If given the chance to do nothing and obtain money, most people would take it. Such was the lure of the housing bubble. People only had to do two things to obtain copious amounts of cash. First, they needed to buy a house. Then they needed to find a lender who would give them money for signing some paperwork. That’s it. No work, no skills, no risk, no sacrifice, nothing. Buy a house, sign some papers, and anyone could…[READ MORE]

Today's Best-Execution Rates: 30YR FIXED - 4.25% FHA/VA - 3.75-4.25% 15 YEAR FIXED - 3.5-3.625% 5 YEAR ARMS -  2.75 - 3.25% depending on the lender USA Housing News has National Coverage Complete data and analysis covering the entire United States and protected territories. Includes detailed data from large to small scale including national, state, MSA, county, city, area, and zip code level. The most complete coverage of any analytics provider.  [READ MORE]

The housing bust twisted people's point of view so much that deadbeats who gamed the system for personal gain were lionized for their behavior. Many people bought during the housing bubble because they wanted a home for their families. They stayed within reasonable debt-to-income guidelines and used fixed rate mortgages. Unfortunately, the prudent were small in number, and if the prudent borrowers lost jobs or suffered financially during the recession, most of them obtained loan modifications making their super-sized debts manageable. They survived. Many other people bought during the housing bubble because they saw their house as an investment, or worse a cash cow they could milk periodically to supplement their spending. These people saw rising house prices as a…[READ MORE]

What's happening down at the beach? Historically, properties in this market sell at a 33.2% premium. Today's premium is 26.2%. This market is 7.0% undervalued. Median home price is $1,668,500, and resale $/SF is $790/SF. Prices rose 4.0% year-over-year. Monthly cost of ownership is $7,660, and rents average $6,245, making owning $1,402 per month more costly than renting. Rents rose 6.0% year-over-year. The current capitalization rate (rent/price) is 3.6%. Market rating = 9   [gview file="" height="840px" width="640px" save="1"][READ MORE]

Debt-to-income ratios must be limited because beyond a certain point, rising debt service becomes a Ponzi scheme. In The Great Housing Bubble, I wrote about how we could prevent the next housing bubble: Loans for the purchase or refinance of residential real estate secured by a mortgage and recorded in the public record are limited by the following parameters based on the borrower’s documented income and general indebtedness and the appraised value of the property at the time of sale or refinance: All payments must be calculated based on a 30-year fixed-rate conventionally-amortizing mortgage regardless of the loan program used. Negative amortization is not permitted. The total debt-to-income ratio for the mortgage loan payment, taxes and insurance cannot exceed 28%…[READ MORE]

Monthly Housing Report

In Memoriam: Tony Bliss 1966-2012