What would Watt do as the new head of the GSEs?

 NEWS, SANTA ANA
May 062013
 
What would Watt do as the new head of the GSEs?

What would Jesus do if he were in charge of the GSEs? “And Jesus went into the temple of God, and cast out all of them who sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves, And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.”—Matthew 21:12-13 So what will Representative Mel Watt do if he is put in charge of the GSEs? Will he make it a den of thieves by reducing principal [Read More...]

Home Speculation is not just for investors

 NEWS
May 052013
 
Home Speculation is not just for investors

The suppression of the housing inventory has resulted in some interesting home construction. The lenders have suppressed many homes from entering the market place. They have become shadow inventory and currently there are about 5 million of them. Most media organizations have even lost interest in reporting these numbers. The lack of existing home inventory has generated a lot of demand even with a small pool of buyers. Home builders have wasted no time to fill this void and started building more new homes. Within this activity there is a much smaller subset of builders that are building homes without [Read More...]

No Cost Home Sales Program

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May 042013
 
No Cost Home Sales Program

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Do pocket listings enrich realtors at the seller’s expense?

 NEWS, TUSTIN
May 032013
 
Do pocket listings enrich realtors at the seller's expense?

A pocket listing is a property kept off the MLS for exclusive showing to select buyers. Most often pocket listings are used by agents who want to double-end the deal and make double the commission. In that scenario, the agent is ignoring the inherent conflict of interest in dual agency to make more money. Typically, this arrangement favors the buyer over the seller. The buyer participates to get a good deal, the agent participates to get a double commission and a quick sale, and the seller… well, he gets screwed. Secret ‘Pocket Listings’ Return in Hot Housing Markets By CNNMoney [Read More...]

Americans are increasingly foolish with debt

 BUENA PARK, NEWS
May 022013
 
Americans are increasingly foolish with debt

After 30 years of falling interest rates, Americans have become addicted to cheap credit and personal Ponzi schemes. People have learned they can take on large debts, consolidate them at lower and lower interest rates, and service that debt with a portion of their income. It’s a bit like learning to live with a lamprey slowly sucking your financial juices. Often it’s not enough to kill, so it’s a parasite people learn to live with. Oftentimes when people get in trouble with debt, they stop using it. As Jesus would say, “sin no more.” Through falling interest rates, loan consolidations, [Read More...]

Expect years of low sales volumes in residential real estate

 ALISO VIEJO, NEWS
May 012013
 
Expect years of low sales volumes in residential real estate

At this point we can be certain that banks are going to avoid or delay foreclosure or short sale until prices rise so they don’t have to lose money on the sale. They have no choice. With banks still exposed to $1 trillion in unsecured mortgage debt, they simply can’t take the losses that are coming. No matter what else happens in the market, unless the banks are forced to change their policies by the government regulators or the federal reserve (a very unlikely event), lenders will continue to kick the can with loan modifications and suspend homes in cloud [Read More...]

Large down payments provide stability to the housing market

 CORONA DEL MAR, NEWS
Apr 302013
 
Large down payments provide stability to the housing market

Down payments are the bedrock of the housing market. Large down payments preserve home ownership, reduce volatility in the market, and reduce the risk to our financial system. The only people who oppose them are realtors and originate-to-sell lenders who see down payments as an impediment to profits and left-wing housing advocates who see down payments as a barrier to putting unqualified borrowers into houses. Down payments preserve home ownership because people who’ve put down large down payments rarely default. In purely economics terms, people shouldn’t consider sunk costs like down payments in their decision making. However, homeowners do. People [Read More...]

Renter’s guide to preparing for home ownership

 COSTA MESA, NEWS
Apr 292013
 
Renter's guide to preparing for home ownership

I have been accused of being “old school” because I never embraced the innovations in real estate finance that inflated the housing bubble. In 2006 preparing for home ownership only required finding a house and signing a few loan documents. It’s a lot more difficult today. Now the old rules are back. Buyers today have to save for a down payment and make sure the payments are affordable. Since so many forgot the old ways, I felt it necessary to revisit these old methods to educate the next generation — and perhaps reeducate the old one. Adjusting your finances People [Read More...]

Average homebuyer didn’t benefit from the low mortgage rates

 NEWS
Apr 272013
 
Average homebuyer didn't benefit from the low mortgage rates

Since the end of 2008 the Federal Reserve has had a Zero Interest Rate Policy (ZIRP), which is the overnight rate interest rate changed to it’s member banks, it’s called the federal funds rate. This interest rates influences treasury yields, corporate bonds, and mortgage rates. The current rate is about .25% or less on a annual basis. In addition, they Federal Reserve also creates money in a program called Quantitative Easing. The Federal Reserve justifies these policies by claiming the recession is so extremely bad (and it is) that’s its necessary to set the rate to almost zero to simulate [Read More...]

Register for Cypress Village Grand Opening with Akason Realty Consulting

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Apr 272013
 
Register for Cypress Village Grand Opening with Akason Realty Consulting

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With house prices rising, the value of lots and raw land is skyrocketing

 NEWPORT COAST, NEWS
Apr 262013
 
With house prices rising, the value of lots and raw land is skyrocketing

The valuation of land used for residential housing is mysterious and often misunderstood. The valuation of lots and raw land requires a detailed knowledge of construction and marketing costs as well as a good estimate of the sales price of the final product: a residential housing unit. In short, the value of a lot is the total revenue (sales price of the home) minus the costs of production and the necessary profit. Land value is a residual calculation. The value of a piece of land is whatever is “left over” after all the other costs of production and profits are [Read More...]

Loan modification can-kicking going to extremes

 NEWS, SANTA ANA
Apr 252013
 
Loan modification can-kicking going to extremes

The mainstream media housing market cheerleaders have been touting the declining delinquency rates as a sign of market health. As I recently pointed out, contrary to media spin, mortgage delinquencies are trending higher. We know that lenders don’t want to foreclose and recognize losses, particularly since banks are still exposed to $1 trillion in unsecured mortgage debt. If they were forced to write down the losses on their bad loans or approve too many short sales, the losses would drive them out of business — either that, or we would have another massive government bailout to deal with. The only [Read More...]

No escape velocity as depleted inventory pummels home sales

 LA HABRA, NEWS
Apr 242013
 
No escape velocity as depleted inventory pummels home sales

Typically, January is the slowest month of the year for real estate sales. Sales volume rises each month through July or August when it peaks as buyers rush to get into homes before their children start a new school year. When sales volumes decline on a monthly basis during the first half of the year, it’s often a troubling sign for the real estate market. Sales volumes declined in March, and it is a sign of a problem in the housing market: a lack of inventory. Why Home Sales Stalled in March By Nick Timiraos — April 22, 2013, 11:46 [Read More...]

Faith in home price appreciation is religion in California

 ALISO VIEJO, NEWS
Apr 232013
 
Faith in home price appreciation is religion in California

Kool aid is flowing again. Last week, I read the following comment that encapsulates the religious faith of most Californians, Besides, OC real estate has been and will continue to be desirable. It’s also very cyclical and I knew there would be another cycle coming much sooner than the bears predicted. This place has never had “flat” home prices… ever. Apparently this commenter had faith in the successful efforts of market manipulators and the herd behavior of California buyers. The last year has done much to reaffirm the faith that was sternly tested by a 40% decline. The problem with [Read More...]

Did stopping HELOC abuse kill the economy?

 ANAHEIM, NEWS
Apr 222013
 
Did stopping HELOC abuse kill the economy?

Economists are busy studying the “wealth effect” to determine how important it is to the country’s economic health. Unfortunately, they don’t really understand the mechanics behind what they are studying. The basic assumption economists make is the people spend more of their liquid savings when assets they own increase in value. This basic assumption is flawed. In my opinion, The “wealth effect” is the most dangerous euphemism in economics. What happens in the real world is not an increase in spending of savings, but an increase in Ponzi borrowing based on inflated asset values. It’s the behavior that lead so [Read More...]

The Eminent Domain of mortgages proposal is rearing it’s ugly head again

 NEWS
Apr 202013
 
The Eminent Domain of mortgages proposal is rearing it's ugly head again

What was the tagline for Jaws 2? “Just when you thought it was safe to get back into the water”. Eminent Domain is the seizing of private property at market rates for public use for example roads, schools, and other infrastructure. Robert Shiller is to my surprise, a proponent of using eminent domain. How is purchasing a mortgage which is a security agreement between the lender and the borrower qualifies as a public use? Eminem domain just a backdoor way to force a principal balance write down on a mortgage by using local government’s police power. The principal reductions completely [Read More...]

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