Of the various types of financial bubbles, debt-fueled housing bubbles are the most damaging.
Debt is great for an economy as it grows and expands — at least on the surface. Politicians like debt growth because when citizens borrow and spend, it stimulates the economy, and a strong… – Debt fueled housing bubbles devastate economic growth
Coastal California real estate will be among the most susceptible to problems with affordability due to rising mortgage rates.
Mortgage rates went down from 2007-2009 because it was necessary to save our banking system — or at least to save the assets of the idiots in charge. Lenders … – Zillow: Coastal California house prices may decline as mortgage rates rise
Expanding credit makes lenders and realtors more money in the short term, but it invariably leads to inflated house prices and a market collapse.
The real estate cycle that culminated in the parabolic rise in prices during the Great Housing Bubble was the result of a series of solutions to… – Credit expansion is the problem in housing, not the solution
The house price crash and subsequent bubble reflation was heavily influenced by bank policy.
Most people assume house prices are the result of market forces determined by supply and demand from individual homebuyers and home sellers. The reality is that policies at the major banks, particularly… – House prices depend on bank policies toward delinquent borrowers
Lenders tighten the terms of loan modifications as prices near the peak and lenders have less risk of loss in foreclosure.
When a borrower secures a loan to purchase a house, they negotiate with lenders over the cost of borrowing (interest rate). In the wake of the new mortgage regulations,… – Loan modification entitlement curtailed as prices rise
As more families eschew homeownership in favor of renting, the cost of renting residential real estate continues to rise.
In the depths of the Great Recession, incomes dropped and many people lost their jobs and many others barely hung on. Ordinarily, such circumstances would cause rents to… – Flipside of declining homeownership rates: relentlessly climbing rents
Stable house prices with low volatility isn’t very exciting, but it’s the best thing possible for residential real estate.
The norm in California housing over the last 40 years has been extreme volatility. We had one stretch in the mid 1990s when prices were closely tethered to… – Housing prices are expensive, affordable, stable, and boring