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The new mortgage regulations curtailed affordability products previously used to sustain sales volumes when prices became too high. The new mortgage regulations will prevent future housing bubbles (we hope), but we are witnessing the success of these new regulations in a surprising change in housing market behavior: high prices are hurting sales volume. Housing economists' conventional wisdom states that rising house prices creates "escape velocity" as potential homebuyers become more motivated, they compete with one another, and they drive prices higher. The motivation may be there... [Read More]
The housing market remains flat on low volume during the he fall and winter of 2013/2014. Housing bulls expect a brisk spring rally with increasing sales; housing bears expect flat pricing on low volume. The Orange County housing market is unchanged from last month, actually unchanged for the last five months. The Median in September 2013 was $531,100, and the median in February 2014 is $532,100; the median hasn't fluctuated more than $2,000 during that entire period, as house prices are limited by affordability constraints. The current OC median home sales price is... [Read More]
Contact us before you register with the builder we will accompany you to the registration and refund you anything over 1.5% offered by the builder. Baker Ranch is the largest of the New Neighborhoods set amidst rolling hills with a beautiful backdrop of majestic mountain vistas. Approximately 2,379 single-and multi-family Spanish and Mediterranean style homes with varying floor plans are currently being constructed. Model homes are now available to the public for viewing. Providing ample opportunities for recreation and relaxation is part of the Baker Ranch vision. Community members... [Read More]
People who aren't paying their mortgages are portrayed as victims of evil bankers, but if people aren't paying their mortgages, can we really say they are victims? I recently wrote about a man who delivered his demolished house to repossessing bank. In that post, I recounted my belief that lenders are more culpable than borrowers in the housing debacle; however, that doesn't absolve borrowers of all responsibility for their actions. Barry Ritholtz in Bailout Nation listed those he blames for the housing bubble, and lenders are higher up the list than borrowers; however, Mr. Ritholtz... [Read More]
The so-called housing recovery is really the reflation of the housing bubble built on an unstable foundation lacking fundamental support. A stable housing market requires strong job and wage growth that stimulates household formation among potential homebuyers. These first-time homebuyers drive up prices and create equity for move-up buyers, stimulating a chain of move-up sales. At least that's how it's supposed to work. Unfortunately, job and wage growth stagnates, first-time homebuyer participation languishes, and although prices are rising, much of what would be move-up equity... [Read More]
Boomerang buyers have not materialized in 2014, and their absence contributed to a 19-year low in mortgage originations. Housing market analysts hoped boomerang buyers would return to the housing market in 2014 and take the place of departing cashflow investors. It isn't happening, and a few housing market analysts are beginning to leak out the bad news; the supposed pent-up demand from boomerang buyers may not materialize. A big part of the bullish sentiment toward real estate emanates from the belief that former owners who lost their houses in foreclosure will return in droves. A... [Read More]
Borrowers react unpredictably when lenders initiate foreclosure proceedings. A man in Bulgaria demolished his house and delivered it to the bank working to repossess it. Lenders Are More Culpable than Borrowers in the housing debacle. Apportioning blame for the housing bubble has become a polarized political issue. The Left wants to portray the evil banks as taking advantage of hapless borrowers thus entitling these borrowers mortgage relief or absolution for strategic default. The Right points out the responsibility borrowers have for their own behavior and wants to bail out the banks... [Read More]
Mortgage delinquencies fall off delinquency reports when non-performing loans are sold by major banks to hedge funds. The news on delinquencies over the last several years encouraged those who want to believe the mortgage mess is past. Most reports over the last several years show a declining mortgage delinquency rate, and despite the levels of delinquency and foreclosure being highly elevated from historic norms, most comfort themselves with hopes that a disastrous situation steadily improves. A declining delinquency rate is to be expected as the economy improves, people go back to... [Read More]
Mr. Burns, 3/1/2014 It's twelve hundred bucks, give or take a hundred. That is how much it presently takes to produce one ounce of gold; of course that is just an average or a mean or a median or whatever. It is not exact and it varies from mine to mine, but on the whole it costs about $1200 to dig and refine 1 oz. of gold. That is also the floor for the price of gold in US dollars. During the last couple of gold cycles, the price could and did go lower than the cost of production, but it is different this time. Yeah, it is different this time. Normally I laugh at anybody... [Read More]
In the absence of rising wages, when mortgage interest rates go up, one of two things will happen: either sales will fall, or prices will fall. Since we don't have a free market in housing, sales will fall and remain depressed for a very long time. Assuming a consistent payment, higher mortgage rates decrease the size of the loan and reduce the amount borrowers can bid on real estate. While it is possible the federal reserve may print enough money to spark wage inflation, given the high levels of residual unemployment and a low labor participation rate, wage inflation is a long way... [Read More]