Author Archive: Irvine Renter

The lowest rungs on the housing ladder pay so much for a roof over their heads, they can't live a life. California has a housing problem. Anyone who lives in California copes with higher housing costs than nearly everywhere else in the United States. This problem is a boon to landowners and high wage earners, but it's a bust for lower middle class wage earners who often put 50% of their income toward housing. Why do we have this problem? First and foremost, the problem is one of supply. California has a chronic shortage of housing. The lack of supply is the primary reason prices are so high. When supply is limited, people substitute downward in quality just to obtain…[READ MORE]

A large majority wants to own a house, but only a small minority is actually saving money to meet that objective. The last line of defense for the housing bulls is the fallacy of pent-up demand. Belief in this fallacy relies on people’s inability to distinguish between desire and demand. The financial media frequently entreats us to stories about how home ownership is not dead because surveys proclaim 88% still desire to own a home. The desire for housing always exceeds the supply because there is always some segment of the market who is unable to obtain home ownership due to the cost of housing and a lack of available credit. True demand is the amount of money those with…[READ MORE]

Float Clubs LLC, a California LLC in good standing, filed a DBA and obtained a business license for a new center for REST, restricted environmental stimulation therapy, named Float Carlsbad, at 880 Carlsbad Village Drive, Suite 102 Carlsbad, Calif., December 21, 2016 – Carlsbad is about to get its first float center. Float Clubs LLC filed a DBA with the County of San Diego and obtained a business license in the city of Carlsbad to operate Float Carlsbad. The owner, Larry Roberts, also reported he applied for a tenant improvement building permit on December 19, 2015. “We’re very excited about this new venture,” said Larry Roberts, owner of Float Carlsbad. “We filed for our building permit, and we expect to…[READ MORE]

Historically, properties in this market sell at a 25.7% discount. Today's discount is 33.4%. This market is 7.8% undervalued. Median home price is $280,400 with a rental parity value of $421,600. This market's discount is $141,200. Monthly payment affordability has been improving over the last 1 month(s). Momentum suggests unchanging affordability. Resale prices on a $/SF basis increased from $183/SF to $184/SF. Resale prices have been rising for 8 month(s). Over the last 12 months, resale prices rose 7.3% indicating a longer term upward price trend. Median rental rates increased $1 last month from $1,860 to $1,862. 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]

As predicted three years ago, now that house prices are near the peak, for-sale inventory is returning to the market. Back in late 2012, I noted that Below-median home inventories may not recover for years. Here was my reasoning: For home inventories to recover, sellers must come back to the market. Since so many loanowners are underwater, particularly at lower price points, very few organic sales occur on below-median properties. Further, since below-median loanowners have a strong incentive to squat until foreclosure, few of these properties are coming to market as short sales. That leaves us with a depleted market that is only be replenished by foreclosures. Banks are in no hurry to process foreclosures and bring these properties to…[READ MORE]

he fear of homelessness is the essential motivation to get people to work to produce goods and services in our society. Modern American culture can trace its roots on the North American continent to pioneering English settlers. Life on the frontier is harsh, and each family unit is self-reliant. In a frontier society, if people didn’t work, and if they didn’t produce their own food and shelter, then they died. Fear of death from starvation or exposure was very real, and anyone who wasn’t motivated to produce something of value to themselves or others faced the near certainty of painful death. In a frontier society, there are no bailouts. We have made much progress over the last four centuries, and…[READ MORE]

Paying too much for a house can leave the family with too little disposable income to satisfy other desires or meet important family obligations. Housing is often touted as an investment you can live in. The dual purpose nature provides twice the utility, so people feel comfortable paying twice the price. Buying a home is always an emotional decision. When people fall in love with a property, if either spouse bothers do perform a financial analysis, it's generally biased toward the answer they want to hear. Rather than an objective look at the costs and benefits, the analysis becomes a flimsy justification for an emotional decision already made. Sometimes, that leads to costly mistakes. Live & Learn: Buying a home…[READ MORE]

Lenders must deny mortgages to good borrowers to prevent too many deadbeats from getting mortgages and destabilizing the housing market. Environment is stronger than will power. -- Paramahansa Yogananda When you were in high school, did your parents ever caution you about the company you keep? The people you share common interests with can be either a positive or a negative influence on your decision making. They can lead to to success, or they can lead you astray. When lenders want to evaluate a potential borrower, they don’t interview friends, but they do examine the financial characteristics of a borrower’s life, and they make determinations based on the historical behavior of others with the same characteristics. That’s the whole point…[READ MORE]

Housing bubble 2.0 is built on stable, fixed-rate mortgages applied to verified wages rather than unstable affordability products applied to borrower lies. The Great Housing Bubble of the 00s was inflated by mortgage affordability products such as option ARMs that allowed borrowers to obtain mortgages more than double the size they could afford using a 30-year conventionally-amortizing mortgage. These toxic mortgage products proved unstable, evidenced by millions of defaults. Lenders followed their standard loss mitigation procedures and foreclosed on delinquent borrowers and resold the resulting real estate owned (REO). Since there were so many of these properties, the MLS supply swelled, and lenders liquidated their inventory at fire-sale prices. House prices were crushed. In 2012 banks went “all in” betting…[READ MORE]

The FHA traded in a viable long-term income stream for some short-term refinance revenue creating potential for future shortfalls to the fund. Supporters of HUD Secretary Julián Castro, a potential VP running mate, gloated over the recent news that the FHA insurance fund swelled to reach it's 2% capital reserve mandate. But the celebration is premature. The FHA insurance fund is not as strong as politicians want to spin it. The FHA became the replacement for subprime lending during the housing bust. It insured millions of loans as prices crashed, and many of those borrowers defaulted and many more are still underwater. With many delinquent loans and collateral values below loan balances, the FHA stands to lose billions. The FHA…[READ MORE]

Monthly Housing Report

In Memoriam: Tony Bliss 1966-2012