Archive for April, 2016

The Panama Papers uncovered the money laundering schemes funneling millions into high-end real state. What happens to this market if the flow of illegal funds suddenly stops? New York city is flooded with Russian cash. Irvine, California, is flooded with Chinese cash. Miami, Florida, is flooded with crime cash. What happens to these housing markets---the recipients of much of this money---when the flow of money abruptly stops? When wealthy oligarchs and the nearly-wealthy who support them in exchange for government largess find themselves faced with tough times, rather than exporting their wealth to foreign safe havens, these wealthy players often find domestic concerns force them to repatriate their money to preserve their status at home. Perhaps this money is needed…[READ MORE]

By eliminating other alternatives for investing saving and encouraging real estate speculation, the Chinese government compels its citizens to sustain a Ponzi scheme, allocating resources where they are not needed. People fuel financial manias with greed and foolish optimism. Generally, prices go up because prices were going up, and seeing that prices were going up, excited investors buy more, so prices keep going up. Once started, financial manias are self-fueling until the pool of great fools is exhausted and the entire edifice implodes under its own weight--at least that's how it usually works. The Chinese real estate market is an obvious bubble. Valuations are not justifiable by any standard metric, yet through a variety of government policies, the Ponzi scheme…[READ MORE]

2015 was touted as the year of the boomerang buyer. Lenders and realtors prepared, and the financial media wrote the invitations, but the boomerang buyers failed to arrive. The financial media periodically runs stories about the return of boomerang buyers, those who lost their homes in foreclosure but bought again. From the beginning I flatly stated this group would not participate in the housing recovery, and they would not be a significant source of demand. In the most complete study conducted on the behavior of boomerang buyers, the authors concluded that “Only about 10% of borrowers with a prior serious delinquency regain access to the mortgage market within 10 years of their default.” So why did so many analysts think…[READ MORE]

IRVINE, Calif., January 2, 2016 – OC Housing News Orange County Housing Market Report: January 2016 Historically, properties in this market sell at a 0.6% premium. Today's discount is 3.5%. This market is 4.1% undervalued. Median home price is $594,700 with a rental parity value of $611,600. This market's discount is $16,900. Monthly payment affordability has been improving over the last 3 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $392/SF to $394/SF. Resale prices have been rising for 11 month(s). Over the last 12 months, resale prices rose 5.1% indicating a longer term upward price trend. Median rental rates declined $8 last month from $2,750 to $2,741. The current capitalization rate (rent/price) is 4.4%.…[READ MORE]

realtors frequently lie to their clients to close deals and generate commissions, placing their needs and desires above their clients. Every word she writes is a lie, including "and" and "the." Mary McCarthy When a realtor talks, do you believe a word of it? At some level you know that most of what they say is bullshit, statements made without regard to the truth, usually to manipulate customer behavior for self-serving reasons. realtors want only one thing: to generate the largest commission possible with the least amount of time and effort. Bullshit helps reach their goal because bullshit smooths over all objections by telling people what they want to hear. The Credibility Continuum The credibility of anyone’s opinions relies on…[READ MORE]

Monthly Housing Report

In Memoriam: Tony Bliss 1966-2012