Archive for May, 2015

Owning or renting is a personal choice, and people have good reasons to rent or to buy. The need for shelter is basic, often closely followed by the desire for community. In the United States, this often translates into a desire to take on a very large mortgage to buy real estate. These basic human emotions drive much of the activity in real estate markets. Most people buy because it is the right time for them. Their career, age, family circumstances all come together to push people toward ownership at different times. Some are fortunate and buy at the bottom of the real estate cycle. Some are not so fortunate and buy at the peak. The most damaging aspect of…[READ MORE]

I own several rental properties, but I still rent my personal residence. Are renters like me less happy that those who bought homes? First, I want to point out I was not always a renter. Like many others, I bought a house (actually I designed and built it). I know the emotional satisfaction that can come from having a house to call my own. In my opinion and experience, there is an emotional quality to owning a house that is not replicated in a rental. When I owned my house, I spent hours tinkering in the yard with landscaping, and my house plants looked like a greenhouse. Since I became a renter, I've killed so many house plants that I…[READ MORE]

The homeownership rate is plunging because the housing bust tarnished the American Dream dream, and a new generation chooses to rent instead. For nearly 100 years, the goals of US government housing policy were to maximize the homeownership rate and the rate of growth in house prices. Homeownership was characterized as the best investment a middle-class family could make, and home ownership has become synonymous with the American Dream. During the early 00s, on the surface conditions looked great. House prices were appreciating rapidly, mortgage equity withdrawal was fueling an economic boom, subprime lending was providing home ownership opportunities to everyone, and the American Dream was being recognized by a record number of Americans. For government officials, this was touted…[READ MORE]

Lending standards are not too tight, but this fact doesn't stop realtors from repeating this lie over and over again. I recently opined that Mortgage lending standards should not be relaxed further. Why, because standards are not too tight today. In fact, the mantra of tight lending standards is a lie promulgated by the National Association of realtors to explain ongoing housing weakness and lobby for continued erosion of standards they hope will generate more sales commissions. Proof of my contention is all available in nearly any news story that publishes comments from realtors. The standard lie goes something like this: realtors say mortgage standards still too tight Industry group asks Congress to review new lending rules By Mark Huffman,…[READ MORE]

I invite you to an event Shevy Akason and I are hosting at 6:30 on Thursday, May 7, at JT Schmids at the District. We provide free appetizers and drinks for your entertainment. Shevy and I would like to meet with you. If you arrive early, we guarantee you one-on-one time to discuss the housing market or anything you want. We will be there before 6:00, and we will stay until closing. Starting at 6:30, I will make a brief presentation on the local housing market. Shevy will follow with stories about his recent client work and what he sees happening in the OC market. We've also invited a local lender and a trust attorney to discuss current loan qualification…[READ MORE]

Historically, properties in this market sell at a 25.7% discount. Today's discount is 35.4%. This market is 9.7% undervalued. Median home price is $261,100 with a rental parity value of $400,100. This market's discount is $139,000. Monthly payment affordability has been improving over the last 7 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $171/SF to $172/SF. Resale prices have been rising for 1 month(s). Over the last 12 months, resale prices rose 4.6% indicating a longer term upward price trend. Median rental rates increased $0 last month from $1,751 to $1,752. The current capitalization rate (rent/price) is 6.4%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[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