Irvine Housing Blog

Speculation in homes would not be possible if it weren’t for the low-interest, easy-money policies of the Fed in tandem with the implicit and stated government guarantees for lenders that pretty well insured them against the risks they were taken.

Make everyone up and down the chain solely responsible for the results of the risks they assume,and housing speculation goes away without regulation.

We haven’t failed in the regulation dept- where we have failed is in policies that made asset inflation (housing appreciation) and debt creation the engines of economic growth, and backed it with agencies like FNMA, FHA, GNMA, and other loan buyers who were there to buy all the crap paper that no one would want without government guarantees.

With the bailout, we have in effect told the financials that we will insure them against their own bad behavior, so you can believe we’ll have another debacle not far down the road and that our system will never regain its credibility.

AS for speculation in energy,food, and other life-necessity commodities, speculators may drive the market for short periods of time, but cannot sustain an artificial market for very long, since runups in commodity prices trigger mass adjustments in the consumption of the commodities. For example, the runup in oil prices triggered demand destruction that has driven oil to low prices. As long as consumption drops and stays relatively low, the prices will stay level-until supplies drop, which will trigger another runup.

Same with food prices. Higher food prices trigger more planted, and the allocation of more land to farming, which often produces surpluses, driving prices back down again.

People conveniently blame commodities speculators for massive increases in food and energy prices, forgetting that the prices would not be supported in spite of speculators’ desires were the fundamental conditions not in place to support them. If those conditions are not there, prices quickly level off. If the prices stay high, look for another reason, a fundamental reason.

In short, regulation will do no good here, and possibly will do great harm, because it will muffle the “feedback”, in the form of higher prices, that will tell us we are overconsuming, and trigger the adjustment we need to make.

I was surprised that the tax code didn’t slow them down much.  For a nonresidence flipped within a year, the flipper should pay short term capital gains tax on the flip.

Unfortunately, a lot of people thought that any home had a similar exclusion to primary residence.  A lot of other people simply didn’t care, since profit on a flip doesn’t generate a 1099.

clothing isn’t a commodity.  cotton is.

Don’t forget about these other two key needs:

+ Education
+ Heathcare

Are you sure the govt. didn’t create the bubbles for a crisis to complete a power grab and complete the Federal Reserve system started about 100 years ago?
Regulations should be on transparency, true specifications, making true free market, not jungles or fixed/rigged markets.  My analysis is the market has been fixed.

Exactly. In addition, I believe all mortgages and loans should be recourse loans. This will make one thinks twice as hard before one takes out the loan.

I had never heard of a debt-to-income ratio before reading this blog.  There’s only one simple market principle most people ever hear about: supply and demand.  For the bubble, it looked like supply was fixed and demand kept growing; the simple economic principle that everyone knew about predicted never-ending growth.  A little bit of knowledge is a dangerous thing.

Maybe we ought to integrate economics into high school educations so that DTI’s become commonly understood.

The great part about that letter is the genius of its satire. Any great satirist would be proud to have written a piece that so brilliantly captures the angst of kool aid intoxicated fools everywhere. The fact that the letter was not satire, and it was in fact written by someone who truly believed and felt the things he was writing about makes that letter a true masterpiece. That letter is so good, I may resurrect it as an update post.

LOL! I never stopped to think about that before.

Laws and regulations require enforcement.

There was scant oversight.

http://www.ocregister.com/ocregister/money/article_2287266.php

oc layoff list—-fyi

You did not need 200k with crazy lending that was going on the past few years, that’s why prices are dropping like a rock, sales above 750k according to a morg guy I spoke with recently are very hard to come by due to financing.

now with the economy taking a nose dive, even if a couple are making 200k, they will worry about their jobs before buying(provided they have not bought)

All you need to do is talk to people living in San Diego, from what I hear it aint fun

One small problem—almost everybody who went to college in the last 30 years has huge student loan debt that you can NOT write off in bankruptcy.  Those loan burdens among educated folks are probably a good reason why liar loans were so popular.

I had not noticed that until you pointed it out. Personally, I think the front elevations that look like this (and there are several floorplans that share it) are extremely ugly and boxy. There are large spans of wall with no visual breaks to provide interest, the openings seem small and out of scale, and absence of a front door makes the place seem grim and uninviting. It looks like the debtor’s prison it is.

Denial.

I’ve seen apartments (Brittany, Sonoma, Oak Glen to name a few) on the MLS listings. I wonder if I could renegotiate my rental contract to what they’ve got listed? It would mean an extra $200-300 per month!

I puzzled by the low vacancy rates in apartments and condo.  In one condo/apartment, there were only about 10% of the parking spaces used.  Only 50% “occupied”  most by corporate housing (purchased condo) with very little people staying in the units.  I think there were only 4 units with people out of 10 units on my wing’s floor.  ~500 total units.  One month free with 12 month lease.  Not willing to lower month rate of $2500 for a 2 bd.  They are still building.  How do the investor’s make money?  Possible they can pay for construction cost if the land is near free and no Melo-Ross.