Irvine Housing Blog

There is also the idea of how an area is described.  Miami might have smart-growth land restrictions, but I doubt they apply to its suburbs like West Kendall, or even the suburbs of Ft Lauderdale that are included in the Case-Shiller index for Miami.  While it is not in the Tampa MSA, places like Ft. Myers and its burbs like Cape Coral saw more ridiculous run-ups than Tampa, but have much less restrictive use measures.

What are the land-use restrictions in Vegas?

I 100% agree that land-use regulations (it’s only restrictions on certain types of activities) might have caused some of the initial run-up (03-04), it cannot explain the behavior of 05-06.  This is because of the fact that a massive percentage of purchases nation-wide at that time were not owner-occupied homes - usually ‘investment’ properties.  80% of condos in Miami were going to investors! Land-use has zero impact on how investors view an area.  It is these speculators, fueled by terrible financing products and wholly irresponsible actions by investment banks and players like AIG.

Houston, and TX in general, has minimal land-use regulations.  However, they used to have terrible fluctuations in housing values.  It doesn’t take much to figure out why. 

This type of analysis (land-use regs caused the bubble) is especially troubling because it is often pushed by those that are strongest against improving bank regulations.  Keeping alternate theories around allow them to say that changing the most dangerous banking practices is unnecessary.

I would offer an alternative theory of areas that have the most house-price volatility: the higher the DTI, the more volatility you will see.  If an area has lower DTI’s then people are evaluating homes primarily wrt replacement costs-depreciation.  If people are maxing out their DTI - well above GSE recommended levels (Miami MSA had an average much higher than the national average at bubble-peak) - any change in financing pushing payments down directly translates to higher prices.  Option-ARMs were available everywhere, but only had large impacts in certain areas.  The common feature of those areas is high DTIs.

The other problem was that banks viewed the collateral as always increasing in value so that a default is a non-event.  Refi or sell, or we foreclose and get the appreciation.

It’s interesting to think, every bank was working on this assumption, and many pension funds or other MBS buyers implicitly also.  However banks did not hold a lot of real-estate directly on their books.  If their assumption were true, then they were leaving a lot of cash on the table.

DOW down this morning after UE numbers, probably green by close, or down fractionally, with futures up again tomorrow.  Main Street twitching to get in the game now and BUY after pressing their noses against the glass watching everybody else get rich. Orderly entrance, orderly exit. Lather rinse repeat.

Hey all you experts, have you seen this:

U.S. Foreclosure Filings May Jump 20% in 2011 as Crisis Peaks

The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.

“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said in an interview at Bloomberg headquarters in New York. “But it’s probably not going to feel good in the process.”

That guy seems pretty confident about a peak in foreclosures. What evidence is there that foreclosures WILL peak?

Strong land use regulations reflect the triumph of the haves against the have nots, often using environmental or energy conservation arguments to support their desire to keep out more people.  Once you legistlate, say, a large minimum lot size it becomes almost impossible to build new housing that most people can afford.  That’s great if you already own a home in that area…not so good if you want to buy!

Land-use regulation is the root of the RE bubble, it helps only rich person, such as Donaldson Bent, as well as politicians get re-elected. But the high flying RE prices only help to increase our national debt ($14 trillion).

My relatives own innumerous land in one of most desired city in Asia, so I have certain knowledge in how this is done in other countries to prevent unfair profits from people invent on the land and sucking our blood and our children’s blood.

In most civilized counties, if a land is approved to be residential zone after the land owner request, the land property tax instance goes up to 10-30%% of the land value, this will force the land own to develop it ASAP. However, if land own does not apply it, then the own may face new regulations and other factors, so the owner need to take risk.

Back to Irvine, after IAC change land zone to residential zone, it stays there for as long as it wishes with super low property tax,  this is the problem, the law should enforce the land to be developed ASAP, this will instantly lower the RE prices.

Here we go!
———————————————————
The Foreclosure Dump
Published: Thursday, 13 Jan 2011 | 1:24 PM ET
By: Diana Olick
CNBC Real Estate Reporter

It’s coming, no question.

Today’s report from RealtyTrac serves as a warning to big banks, Fannie, Freddie and local communities; The foreclosure glut is coming, and they’d better be ready to get rid of that glut in a big way.

MORE
http://www.cnbc.com/id/41059824

The incentives are wrong as long as we incentivize and allow bankers to lie, cheat, and steal they will.

http://blogs.forbes.com/robertlenzner/2011/01/12/us-banks-reporting-phantom-income-on-1-4-trillion-delinquent-mortgages/?boxes=Homepagechannels

we wont accept anything less then $462,000

Grammar FAIL.

Regarding the property example, it looks more like the toolbag is just maximizing his cashflow, far beyond anything rent would’ve provided over cost of ownership.  I’m not saying it’s right, just highly profitable!