Good climate, good services, and a chronic shortage of housing combine to create an intractable problem with homelessness in California. What is the minimum level of housing quality people are entitled to? If you pose that question to Coastal California residents, many will cite their needs for a large single-family detached house with granite counter tops — and they believe they are entitled to it. For me, I’m just thankful I am not homeless. Have you ever thought about what you would do if you faced homelessness? How would you tackle the problems of daily life without stable shelter where you can store your possessions or control your environment? If I were facing homelessness, I wouldn’t want to freeze, and…[READ MORE]

When people view homes as an investment rather than a family home, prices become volatile, and it disrupts people's financial lives. Repost from OC Housing News 2011-2016 Homeowners love it when houses go up in price; after all, it makes them rich. During a home price rally, the bulls intoxicate with greed and obsess about owning real estate as an investment. However, once houses become an investment, the prices of houses begin to behave like an investment, and volatility enters the system. Houses should not trade with the volatility of a commodities market because it causes more harm than good. Price volatility is a very disruptive feature in a housing market: the upswings are euphoric, and the downswings are devastating —…[READ MORE]

Future housing busts will be busts in sales volume, not in price. Repost from OC Housing News 2011-2016 When lenders make loans, they far prefer borrowers to repay those loans; in fact, their entire business plan relies on it. As long as borrowers are current with their payments, lenders are happy and making money. When borrowers don’t make their payments, the end result is a distressed sale. If there are enough of these, market prices go down dramatically, causing significant lender losses. Lenders know this too, so when distressed loans become an overwhelming problem, they devise can-kicking methods including loan modifications, mark-to-fantasy accounting, and when all else fails, they simply allow the delinquent borrowers to squat without paying a dime. Below is…[READ MORE]

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