In the second post I wrote for the IHB back on March 3, 2007, I discussed a basic truth of housing markets: Cashflow Investors have a different agenda; they want to turn a monthly profit from ownership. For them, the cost of ownership must be less than prevailing rent for them to make a return on their equity investment. Cashflow Investors form a durable bottom. If prices drop low enough for this group to get into the market, the influx [Read More...]
The housing bust began when subprime borrowers were unable to make payments on their 2/28 loans. Subprime borrowers have less resources than other borrowers, so when they experience any financial distress, they immediately implode. The collapse of subprime in 2007 led to a large number of foreclosures in 2008, and housing began its death spiral. I have been bearish on high end properties since the beginning of the housing bust. So far, reality has not met up with my most [Read More...]
The federal reserve is dominated by Keynesian economists who all have one thing in common: when their policies fail, they believe doing more will somehow succeed. If the definition of insanity is repeating the same behavior expecting a different result, then all Keynesian economists and all federal reserve officials are certifiably insane. Bernanke Doubles Down on Fed Bet Defied by Recession: Mortgages January 20, 2012, 3:40 PM EST — Bloomberg — By Jody Shenn Jan. 11 (Bloomberg) — Ben S. [Read More...]
Redfin is the most popular real estate search site in Southern California. They track the most popular listings based on the number of views each receives. Below are some of the most viewed property listings in Orange County. Check them out. See what everyone else finds so interesting. 4 WHEELER Irvine, CA 92620 — $610,000 Competing Listings $725,000 5 HANCOCK 0.2 miles 3 bd / 2 ba 1,900 Sq. Ft. $675,000 30 JACKSON 0.28 miles 4 bd / 2.5 ba [Read More...]
The FHA has been the lender of last resort during the collapse of the housing bubble. Conventional lending dried up once they realized how lax lending standards became, and how likely it was that borrowers would strategically default and cause more losses. Without the FHA, a Las Vegas style crash of 70% or more would have been common to markets across the country. The banks would have been obliterated. The FHA insured many of the loans issued as prices declined. [Read More...]
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