Irvine Housing Blog

The best quote I’ve seen about financial innovation was from former Fed Chairman Paul Volker who said that the only true financial innovation of the last 20 years that added real value to the economy was the ATM machine.  The rest of innovation was just gambling.

I don’t see the point in 30% down, I think 20% down was working just fine.  It all went downhill when that started getting chopped down to 10%, then 5%, 3%, and eventually to no-down.  Preserving the 20% down should keep homeowners feeling plenty vested to think extremely hard about abandoning ship.  It will likely go far in keeping prices in check, which will in turn keep volatility in check and equities more intact.

Actually, I feel pretty strongly that just this requirement alone should greatly reduce the problems of the past 10 years in the credit market.  We don’t even need to mess with controlling the securitized assets if the government restricts over-leverage with this single requirement.  There would be no way to build an over-abundance of risky assets when only those with the cash can get a loan.

Thank you for taking the time for the rewrite.  I know the feeling of doing a data dump and then having to recreate it. 

Oh yes, just about forgot to mention that I close escrow today!  We moved here from St. Croix to Irvine to Rancho 20 months ago and have found our home here in Ranch Santa Margarita.  I’ve enjoyed your blogging and the information provided helped me to make, IMHO, an intelligent long-term decision.  So I guess I’m no longer MovingBack and shall now call myself BackHomeAgain.

Thank You.

100% down should be the requirement.

Assuming this family lived there the entire time since 1997
Cashing out and departing the closing table with net a $500K check is an excellent move.
In the same time frame, renting in Irvine means you were SOL.

Mike Dunn is famous (or notorious) for his listing descriptions. One of my favorites is:

“End of cul de sac, more upgrades than Taj Mahal, Forbidden City, Taipei Tower and the Burj Dubai combined!!!!”

I wonder how his clients feel about his listings… although I’m sure they just want it sold at a high price.

If you were to use something like Google Docs (or even Gmail) to compose your comments, you probably would not need to worry about losing anything you write. “An ounce of prevention….” Furthermore, because you post your comments publicly, I suppose you wouldn’t need to wrestle with the inherent loss of privacy associated with putting data “in a cloud.”

By the way, although I think you may be a bit obsessed with this blog, I enjoy your astute commentaries. I’ve learned much by reading your comments and those of the other contributors. At the risk of coming across as a preachy do-gooder, because I tend to become far too obsessed myself for my own good, I see many signs that you may be harming your overall health with your current behavior. I’m sorry to preach (I certainly have many, many shortcomings myself) but my hunch is that if were to listen to your wife- who I expect says things like, “Honey, why don’t you come to bed now?”- you might be better off.

There is little difference in risk between a 10-year T-bill and a GSE MBS. There is usually a spread between the two that represents the risk premium the market demands for risk of loss. With direct government backing, the spread is very small, so mortgage interest rates are relatively close to 10-year yields.
——

This is incorrect. GSE MBS have prepayment and liquidity risk. That is the main reason why they have different rates to similar duration treasuries.

IrvineRenter, 2 much scotch…......... sorry 4 the typo.

Thank you Larry, for finding the energy and losing the sleep to rewrite your post.  I’ve gotten so addicted to IHB that it would wreck my day if there wasn’t a new one to read.  It will be a long slow withdrawal for me when you stop writing.

I second the $10!

> I calmed down, wrote this pep talk to myself, drank my coffee, and hunkered down to rewrite it all. Reliability trumps sleep.

Attaboy!

An thanks to Mrs. IR too.

(to readers) less effective way than the $10 site fee to show Larry your appreciation is to buy his book.  Some of that $ will go to Amazon and the publisher, but some will go to him, and it will help the book’s sales #s.

Have you ever polled your readers to get a profile for advertisers?  I’d imagine you’d be getting a good slice of your local population and out-of-state readers would be well-educated and fairly high income (attractive eyes for advertisers).

Bill Gates and Steve Jobs stopped writing code a long time ago.  You could add guest posters, or other regular contributors.

Great advice from John Stumpf!

I’m a new reader of your blog. I don’t have an astute observation, but a question for you. We are currently renting and we want to buy a $600,000 home. We have $350,000 for a down payment and no debt. We also need the tax write off of a home. Would your advice be to wait since prices are coming down, or buy now?

Thank you!

Hi Betsy;
  Thanks for the note. Historically speaking one is better off buying when interest rates are high and prices are lower and then refinancing when rates go back down. Since you have such a large down payment, the artificially low interest rates that are keeping prices high are working against you.
    Buying in today’s market makes more sense for people that plan to leverage and have lower down payments, particularly under 30%, are planning to hold long term, and find a home that is below rental parity. With such a large amount down, you should speak with your accountant to make sure that you have the benefits of the tax write-off in the proper perspective.  In addition, with artificially low rates and the banks holding back shadow inventory and all of the loan modifications that will serve as a short term band aid, there is a lot more downside risk than upside potential.
    There are a lot of factors that come into play, you can email me at; shevy@idealhomebrokers.com and to set up a time to meeting and discuss your individual situation.