Irvine Housing Blog

FAIL.

IR, this is not one of your most constructive ideas.

How is it better or fairer to offer government assistance to “cash flow” investors who otherwise don’t meet income and equity requirements for buying rental property?

You don’t correct unfairness and perversion by introducing more. Assistance for cash flow investors will only generate more bad loans for more unqualified buyers, in this case people buying for a “cash flow” investment.

Government meddling in the housing market by means of programs to assist buyers in buying what they otherwise could not afford has not helped keep housing affordable, but has perverted the housing market and kept values artificially inflated.

This debacle was not caused by the operations of a “free market”, but by government manipulation of the credit and housing markets . There has not been a free market in housing since the 20s, or even before. Our policy makers created this debacle by making credit available to absolutely everyone, by setting up the GSEs to buy loans that otherwise would never have been written because of their inherent risk, and by implicitly guaranteeing lenders against the risks involved.

Let’s not make the same mistake again with “cashflow” investors. If a “cashflow investor” cannot meet the equity and income requirements, restrictive though they may be, he should not be investing. The best way to rescue the housing market is let prices go where they will go when all the artificial supports are removed.

Here is where some of your bubble information should take precedence.  During the run-up of the bubble, investors were getting owner-occupant loans because they were either misrepresenting their intention to occupy, or the banks didn’t care.  Investors added the last froth to the bubble, and were the first to default.  Like 80% of condos in Miami were going to investors.  That was a key sign of a pure bubble.  Investors, and the idea of appreciation and heloc fueled paper real estate empires.  The shift to cash-flow investors is not a huge difference.  Would c-f investors really ignore capital appreciation if the props caused prices to go up ?

If any program were implemented, investors would have to pay higher rates, and have higher down payments.  You could also add in significant pre-payment penalties to force the investors to hold the properties for a significant period of time.

Where I would like to see intervention is putting apartment-to-condo’s back together into apartment complexes, where investors and single-entity control would provide significant benefit.

Bloggers inability to see his own hypocrisy always amazes me.

There are investors in Las Vegas waiting on the side lines since Vegas is in horrible shape.  These investors think blogger is knife catching.  Let’s get the tax payers to help inflate Las Vegas prices for the blogger.

Wouldn’t further government intervention simply do more to delay housing prices from falling to market-clearing levels?

Larry Roberts you are the biggest hypocrite of them all.

You complain about the bubble priced market then start your own brokerage company to help people buy in this market.

You complain about government bailing out homeowners keeping prices artificially high then after buying your own investment properties you say government should bail out investors to keep prices artificially high.

Maybe you should run for office, you’d make a good politician.

Why not just have the elite in the world buy up every toxic mortgage, and then artificially control the rent market, thereby keeping home prices high, and the american people in debt slavery forever.

Yup, that would work for awhile. Great Idea!!!

Talk about crony capitalism, but then again, if you have the capital, there’s nothing crony about it now is there? I’m surprised you even posted this article with your history of Wall St. controlled finances, but then again, now you have some cash to throw around from investors…amazing how one’s attitude changes when you deal with money isn’t it?

Another huge problem with this type of policy is that a number of ex mortgage guys that put people into these bad loans are going to be the ones taking advantage of something like this. We’ve already seen some of that with the heads of failed mortgage companies buying notes and gaining huge personal benefit by taking advantage of government modification programs.

  Ultimately, the best answer is no government intervention to control supply, demand, or artificially set a floor on prices. Just because one option is not as bad as another does not make it good. However, a case can be made supporting the lesser of two evils, even if one disagrees funamentally, if an evil is going to occur. I believe that most people understand that the government is unlikely to do nothing if more markets continue to fall similar to the Vegas market.

    Based upon recent history as well as all of the proposals being made, it seems that the best option of doing nothing is unlikely. However, I believe that it should be made clear that’s what people want and that message clearly sent.

Hey, I gotta great idea. How about the govt give money away to anybody (homebuyers, investors, little green men from Mars) to buy all this shadow inventory from us poor banks at inflated prices. Me like free money. Feed me more free money, oink oink oink. Hey I need my bonus you know with Christmas shopping and all to do. Oink.

Well,  I gotta say that this is my last visit here.

This idea takes the cake.

Crony capitialism is bad unless you’re one of the cronies.

There are plenty of renters who would like to buy homes at reasonable prices but NOOOO.  You want the government to HELP YOU BECOME OUR FUTURE LANDLORD?

FUCK YOU!

After I read this, I was thinking that today might be April Fool’s Day.  Nope - 6 more months away.

LOL

You had to know you were going to get fanmail for this one Larry… 

Without being overly emotional about it, I’ll just say that the idea repulses me, and not because you personally would profit off it.

This also ignores the fact that you’ll be shafting the owner-occupant buyers.

It’s already hard enough for them to compete with financed loans vs all-cash investors on short sales, foreclosures, auctions and normal sales… what more on homes where the prices are higher?

Incentives should go to owners… not flippers, speculators and land barons.

IR, readers are giving you a bum rap here which I think is unwarranted.  You stated your case, provided logic behind your ideas and stated your obvious bias. 

My preference, even as a homeowner, has always been to let prices fall to where they need to go.  Prices would actually fall further than where they would need to go, so maybe this isn’t the best solution, but any non free market solution is also problematic.

If you are going to try to provide some stability to the housing market, which seems to be a foregone conclusion, then I think it is better addressed in facilitating trustee sales.  I have a strong dislike for bailing out people who aren’t paying their mortgage and allowing insane squat times.

So I think IR is looking for a solution in the right area.  Note that the proposal that IR raises actually increases the price that IR would have to pay at trustee sale. 

Currently the trustee sales process is set up to discourage a market price.  What sense does that make??  You have to be a cash customer, info that the buyer would want is provided last minute, what properties are available is last minute, non-experts can get screwed at trustee sales, etc.  A lot of this is the banks fault, but it would seem like the government could do things that wouldn’t cost a nickle that would make the trustee sales process more efficient such non-experts and less than full cash buyers could participate. 

For example, why not allow trustee sales to be financed with GSE loans such that the GSEs actually profit?  This would actually make money for the government (directly and indirectly), would help the banks by increasing trustee sales prices, would help homeowners by supporting home prices, would help provide access to the trustee sales market to renters and would expedite a solution (ie the process of transitioning homes to people who can afford them).

I am probably off on this as RE is far from my field of expertise, but I do think that the trustee sales process could be dramatically improved in ways that don’t cost a dime and would help most everybody.

Isn’t the goal of IR’s investment fund to purchase Irvine properties at trustee sale and flip them?
What does Las Vegas have to do with any of this?

These jackasses at US Treassury, FED, and others publishing/making recommendations for investors to buy GSE homes is the height of all manipulation.

How about putting up all the homes up for sale in auction format and where GSE’s would also lend money? The cash folks get 30-40% discounts, which I say is cheating by banks to their own shareholders by selling the property for a lot less than its actually worth. Although price depresses so much in cash transaction that it also prevents the ultinate price decline as investors turn around to the market rate.

My way of thinking is that nothing, I mean nothing can prevent the upcoming correction and subsequent collapse in housing. We need jobs and we have no plan for that, Govt. things that Housing will stabalize economy while the fact is that it wont. Housing is a drag like a cancer and it needs to be cleared out the right way, not by manipulaiton.

Hunker down and wait for your turn OR buy one today and become a squatter.

Also Irvinerenter, if job situation does not improve, you think as property values fall rents wont? Rent does fall.

Here in Laguna Hills where I live, my townhome rented for $1450 in 2006, today I pay $1600, comparable rent went as high as $1850 in 2008 and today its down to $1550 and falling further as property was one as high as $450K and today you can buy it for $250-$275K.

Rents do fall, its about affordability. Not all who give up living here in Irvine will go rent in irvine as they can get smaller home for the same price in Inland Empire, this is how inventory there gets sucked first.

What are your thoughts on rents falling? I know they do, so to calculate rental parity today may be deciving, No?

IrvineRenter,
Tell me it ain’t so…  You did write this blog.

Will this just be leveling the playing field for small investor, who can get the 0.5% govt back short-term loans or the 2.5% middle-term loans.

The proposal will just jack up the price and will delay the price falling to substainable levels.  (like the low to no documentation loans, ARMs, etc.).

Foreign investors not scared of housing market

http://www.msnbc.msn.com/id/39509509/ns/business-real_estate/deck/msn

IMHO, IR is deliberately stirring controversy to spur debate and get people to continue to visit and read the blog. Sort of like a web Howard Stern or that guy on 97 FM. On this one, he should have brought his ideas to the table but should have left the conclusion to be written by the readers instead of him. The profanity by a couple of readers was unwarranted and unnecessary.

just let people file bankruptcy and do cramdowns.

phase out interest deductions and especially on housing of all types.

if they need cheap loans let FHA and VA provide those.

al this is is enriching the rich..