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Author Archive: Irvine Renter

The merger of Zillow and Trulia may force marginal agents out of the business and concentrate activity among the best producers. American realtors have long maintained a system of high commissions that bloats the number of working real estate agents. Many poorly trained and poor performing agents stay in the business despite completing few transactions because they can make a great deal of money on the few transactions they do complete. Real estate recessions purges many of these bad agents, but like April showers bring May flowers, increased sales volumes sprouts tens of thousands of new agents who cling to the margins. Other countries don't have our high commission system, and they have fewer real estate agents. In Great Britain…[READ MORE]

As mortgage interest rates go up, affordability declines. Only rising wages can offset the effect of rising mortgage rates. Will it be enough? When mortgage interest rates finally begin to rise up to historic norms, a move anticipated by nearly everyone, home affordability will suffer because borrowers will need to spend more money to pay their mortgages. Since most borrowers maximize their loan amounts, the only way to overcome the problem of rising mortgage rates is for borrowers to make more money. With high unemployment and low labor participation rates, employers don't need to increase pay to fill new jobs, and employees lack the leverage to force employers to pay more. But what if rising interest rates across the lending…[READ MORE]

The housing market is changing, but many sellers refuse to acknowledge the cooling market may force them to lower their asking prices. It's no longer a seller's market; wishful thinking and hope of a fall turnaround won't change that basic fact. Sellers are stubborn: even during the crash, many were unwilling to lower their prices to make a sale; after all, real estate only goes up, right? Real Estate's Epic Rebound Starts to Cool A Potential Rate Rise Also Poses Uncertainty By Gregory Zuckerman, Aug. 2, 2014 10:59 p.m. ET The U.S. real-estate market has stormed back over the past five years after enduring its most brutal period since the Great Depression. The rebound has rewarded investors and boosted the…[READ MORE]

Lenders slowly process loan modifications, mostly to avoid approving them. While they wait, most loanowners enjoy a free ride. Should we be concerned about the speed at which lenders process loan modification applications? After all, most borrowers who apply for a loan modification stop making payments during the process. They apply because they can't afford the payment in the houses they occupy, so they quit paying while lenders consider their applications. From a borrower's perspective, waiting may create uncertainty, but they gain the benefit of free housing for as long as it takes. Mortgage Relief Faces Mounting Backlog as Homeowners Await Aid Reporter: Christine Layton July 30, 2014 Financially struggling homeowners are facing long delays after turning to the foreclosure…[READ MORE]

A global economic slowdown could trigger a US recession and potentially cause another housing bust. The US economy struggles for growth five years after the Great Recession officially ended. Economists point to encouraging signs of future growth -- just as they erroneously have over the last five years. The green shoots meme is so old and overused that economists tire of using it, reporters tire of reporting it, and ordinary citizens tire of hearing it. Realistically, the US economy is still fragile, and a global economic slowdown could easily trigger a recession in the US, but would that recession cause another housing bust? Economist who predicted busted housing bubble says another recession is coming By Bernard Condon, Associated Press, Posted:…[READ MORE]

Lenders reflated the housing bubble to pass their bad loans to new bagholders. Current forecasts show lenders must complete the task by 2016 before prices peak. How can you tell whether a market is overvalued, undervalued, or fairly valued? It's more than an academic concern today because lenders, realtors, and even government officials push average families to buy houses ostensibly to gain the financial benefits of home ownership. Unfortunately, as the housing bubble rudely slapped an entire generation, most potential homebuyers today realize the housing market is volatile and manipulated, and it may not be the investment opportunity it once was. Realistically, the only way potential homebuyers will gain peace-of-mind from their purchase is to either buy on blind faith…[READ MORE]

Federal reserve policy designed to stimulate housing and housing employment is having mixed results. The job market for real estate professionals is weak. Today's post is about a personal journey of mine to find employment in the land development field in Southern California. Most of the posts on this site cover macroeconomic issues facing housing, but macroeconomic data is merely an aggregation of individual actions taken by people much like me responding to conditions and opportunities. Most recent macroeconomic policy was intended reflate the housing bubble with the hoped-for side benefit of increasing construction and thereby increasing construction-related employment -- employment for people like me. My story is a microcosm of the spotty results these policies yielded so far. The…[READ MORE]

US policymakers want to increase home prices and maximize the home ownership rate. Prices are up, but the home ownership rates continues to drop. Declines in the home ownership rate were inevitable when the housing bubble popped. Foreclosures pushed people out of their homes and into rentals at an unprecedented rate. While policymakers have managed to manipulate supply to cause a rise in home prices, demand still hasn't picked up, and the home ownership rate continues to slide. It shouldn't be too surprising the home ownership rate isn't rising. New home sales are weak, and so are pending home sales, recently slipping 1.1%. Further, new multi-family construction is up, so many more rental units are coming to market. For the…[READ MORE]

Seasonally adjusted home prices fell in may for the first time in over two years. Robert Shiller warns of possible turning point in the housing market. When a housing market reaches a top, it's usually preceded by an unexpected drop in sales during the prime selling season. In June of 2006, sales fell off a cliff, and prices soon followed, and in July of 2010 after expiration of the tax credits, sales again suddenly collapsed, and home prices fell for another 18 months. Here we are in 2014, and sales volumes have been weak all year, and new home sales took a large and unexpected dip. Are we on the cusp of another market downturn? US seasonally adjusted home prices…[READ MORE]

The housing bubble deniers in China use poor reasoning and macroeconomic arguments to ignore their massive Ponzi scheme. Here in America, the bubble deniers — and Never forget the bulls and bubble deniers were completely and totally wrong — the bubble deniers succumb to their optimism bias and comforted themselves with fallacies and wishful thinking, even past the point where denying the obvious was no longer operative. The same is true in China. China's Property Market Is No Bubble A correction is coming, but not a crash. By YUKON HUANG, July 24, 2014 12:44 p.m. ET Will China's property bubble trigger a financial crisis? Concern is high this year thanks to deteriorating sales figures and reports of large price cuts.…[READ MORE]

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