Dr. Housing Bubble Blog

Foreclosure amnesia – California distressed inventory still larger than non-distressed properties. The psychological push to buy with low interest rates. The new marketing to purchase homes.

drhousingbubble — Tue, 22 May 2012 22:22:26 +0000

There is a danger with keeping mortgage rates artificially low for such a long time. I’ve seen countless marketing pitches from those in the industry now using the historically low interest rate as the major impetus for people to buy. Ignore the weak income growth or massive budget deficits both at the state and federal [...]

The lingering legacy of the shadow inventory – homeownership rate will bottom in 2014. Goldman Sachs predicts homeownership bottom.

drhousingbubble — Fri, 18 May 2012 17:56:49 +0000

The banking system is starting to clear out shadow inventory and nationwide, prices are inching closer to a nominal bottom. It is important to understand how crucial a healthy housing market is for the stability of household balance sheets. Most Americans derive the bulk of their net worth from housing. The fact that nearly 10,000,000 [...]

The allure of low mortgage rates – time to buy in Compton. Culver City and Arcadia continue mid-tier correction.

drhousingbubble — Wed, 16 May 2012 05:48:00 +0000

There is something deceiving about the current low mortgage rates. To a certain extent they obscure the underlying economic fundamentals that are hitting the state. Certainly no one is going to look at an underemployment rate above 20 percent and a budget deficit of $16 billion and claim that the economy is booming. Old habits [...]

A brave new economy – California budget implications for real estate – 4 key metrics highlighting a very weak California economy.

drhousingbubble — Sun, 13 May 2012 17:07:49 +0000

Over the weekend it was announced that California’s large $9 billion budget deficit was no longer $9 billion but $16 billion. Whoops. Last week J.P. Morgan Chase, a darling of the Federal Reserve, reported a $2 billion trading loss on “synthetic derivatives” yet still had the audacity to state no further regulation was needed. Whoops. [...]

Will the FHA require a bailout? – 12,000,000 underwater mortgages 3,000,000 are FHA insured loans. 1 million underwater mortgages originated in last two years.

drhousingbubble — Thu, 10 May 2012 16:11:28 +0000

FHA insured loans have been a big booster for the current market. Historically FHA insured loans made up roughly 8 to 12 percent of all mortgage originations but in 2009 they hit 30 percent. For first time home buyers it was a stunning 50 percent showing that most people can only purchase a home today [...]