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Author Archive: Irvine Renter

Reporters in the mainstream media convince beleaguered homeowners and potential homebuyers problems with bad mortgages is past; however, this may not be an accurate depiction. The mainstream financial media, in it's insatiable desire to please and tell people what they want to hear, churns out story after story about a recovering housing market. To be sure, house prices are up, but as I asked in Home sales down, household formation down, purchase applications down: Housing recovery?, if house prices are up yet all fundamentals are weak, can we really call it a housing recovery? I've stated many times my contention that the housing recovery is built on a foundation of market manipulation; distressed inventory dried up because lenders opted to…[READ MORE]

... and Thursday, and Friday, and Sunday, and Monday; ok already, the whole rest of the week. Last time, we left off with some fool opening a water valve while looking directly into the out flow.  After he dried himself off, and after drying off the bathroom, it was time to install the "custom" vanity.     See, I told you the space was odd shaped and there was no off the shelf vanity that would fit.  The plumbing can not be installed until after the countertop is installed and the countertop can not be installed until it has been fabricated.  So, it's off to the internut, Lowe's, and Home Depot to have a "custom" countertop fabricated.  My understanding of…[READ MORE]

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 transfered 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 financial media blames the weather to cover up the underlying weakness in housing. “It is better to offer no excuse than a bad one.” ― George Washington The housing recovery sputters badly; housing starts are down, mortgage applications are down, and buyers evaporated -- at the time of year when all of these factors are supposed to increase. These unexpected developments, unexpected by brilliant economists, demand explanation. Mainstream media reporters, the paragons of insightful analysis and objective reporting, explain how these events caught reporters and economists completely by surprise the only way an apologist knows how; they make up a lame excuse: the weather. Cold weather sinks U.S. home building in January By Lucia Mutikani, WASHINGTON Wed Feb 19,…[READ MORE]

Investors buy delinquent mortgages from lenders with plans to foreclose, boot out the mortgage squatters, and convert the property to rentals. This strategy may cause an increase in foreclosures nationwide. REO-to-rental investment hedge funds exhausted the supply of homes they could acquire at auction or on the MLS for the prices they need to make the investment profitable. Desperate for more homes to add to their portfolios, investors turn to lenders to buy the non-performing loans on their books so these investors can foreclose on the delinquent borrower and obtain a rental property. This new strategy may cause a dramatic increase in the number of foreclosures. I didn't see this coming. Like most industry observers, I assumed that once house…[READ MORE]

The next generation of homebuyers, Millennials, have too much debt to buy their first homes. As a result, first-time homebuyer participation is at near-record lows, and the situation isn't likely to change any time soon. The typical sources of housing demand are largely absent; in particular, first-time homebuyer participation is at near-record low levels. First-time bomebuyers only make up 29% of the market today, compared to 40% in normal times, and without first-time homebuyers, long-term homeowners are unable to execute move-up trades. This causes sales volumes to flag across all market segments, which is what we're seeing now. Some point to the lack of first-time homebuyers as a significant source of pent-up demand; for example, more Millennials are living at…[READ MORE]

People change their views on rising house prices. Rather than cheering an endless increase, they worry about another decline. Economists and politicians almost universally accept that everyone wants to see rising house prices. Having written for seven years to an audience of prospective homebuyers, I can attest that some people don't want to see perpetually rising home prices -- at least now while they're shopping for a home. The severity of the last housing bust destroyed the central myth concerning rising house prices: real estate prices do not only go up. Once people realized housing was not the safe investment they thought it was, their enthusiasm for owning declined precipitously -- as it should. The obvious suddenly hit everyone in…[READ MORE]

Activists plead for reinstatement of the tax break on forgiven debt that expired at the end of last year. The value of the forgiven debt is now taxed as income -- as it should be. Congress likes to provide tax breaks and subsidies to encourage certain activities and dissuade others. There is a simple truth about taxes: any activity that is taxed will diminish, and any activity that is subsidized will increase. Do we want to see more more irresponsible borrowing? If so, then we should forgive debts and fail to tax the free money as income. That's what some activists are proposing. I believe forgiven debt should be taxed, particularly on mortgage equity withdrawal. Did borrowers deserve a tax…[READ MORE]

Home prices rise, but investors pull back, home sales drop, household formation craters, mortgage applications decline, and the federal reserve frets over weak job growth. We won't know whether or not the recovery died last year until the spring numbers come in, but suffice to say, right now, the recovery looks shaky at best. Rising house prices are generally a side effect of a strong economy. A strong housing market recovery would witness rising home sales, rising household formation, increasing purchase applications, rising wages, and employment growth -- not just rising prices. Right now, all we have is rising prices, and the lack of fundamental support is good cause to question the strength of the so-called housing recovery. Anyone who…[READ MORE]

The former political leaders in Irvine, California, squandered $200,000,000, then ordered their partners-in-corruption to cover up the details of no-bid contracts and other political largess. I am not politically partisan; I bash corruption and incompetence from either party. Local politics often renders political partisanship meaningless; for example, political party registration strongly favors Republicans in Irvine, yet Democrats controlled Irvine's city council for many years. When Sukhee Kang took a shot at US Congress last election cycle, the Irvine Democrats couldn’t field a replacement strong enough to keep control. Once Republicans gained control, they embarked on an investigation of the ruling Democrats activities concerning the Irvine’s Great Park boondoggle that blew $200 million. What they turned up is a portrait of…[READ MORE]

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