The Great Housing Bubble Media Center - Oct 9th, 2008
Sample Review
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THE GREAT HOUSING BUBBLE: WHY DID HOUSE PRICES FALL?
The Great Housing Bubble is a fantastic resource for anyone
looking to understand why home prices fell. The writing has exceptional
depth and detail, and it is presented in an engaging and
easy-to-understand manner. It is destined to be the standard by which
other books on the subject will be measured. It is the first book
written after prices peaked, and it is the first in the genre to detail
the psychological factors that are arguably more important for
understanding the housing bubble. There have been a number of books
written while prices were rising that used measures of price relative
to historic norms and sounded the alarm of an impending market crash.
Economic statistics and technical, measurable factors show what people
did, but they do not explain why they did it. The Great Housing Bubble
analyzes not only what happened; it explains why it happened.
The author of The Great Housing Bubble, Lawrence Roberts, works in
the real estate industry, and he lives, Irvine, California, the center
of both the housing bubble and the subprime universe. Irvine's
residential real estate market witnessed one of the most dramatic
increases in prices of any market in the United States. His unique
location and his position in the industry make him uniquely qualified
to discuss the housing bubble.
The Great Housing Bubble is an easy read. It was developed section
by section through a series of posts on the Irvine Housing Blog. With
the feedback provided by 3,000 daily proofreaders, the writing is
clear, concise, and accurate. Much of the work reflects the collective
wisdom of this large and diverse community. However, the book is also a
fully researched and supported academic work. Statistics used in the
work are cited, and conclusions are drawn from academic literature and
documented in an extensive bibliography and end notes. These academic
research papers are used to support the author’s arguments and lift the
work from a series of unsubstantiated opinions to a collective,
unbiased, and widely accepted view of the housing bubble.
The Great Housing Bubble concludes with a series of recommendations
for preventing future housing bubbles. There are both regulatory and
market-based solutions. These include changes in standard appraisal
methodology, the revamping of our current system of loan standards and
documentation, and a call to regulate the sales tactics of realtors.
These solutions are carefully explained, and although they would be
difficult to implement politically, if these proposals were adopted,
future housing bubbles would be very unlikely.
Sample Media Blubs
If you don't have room for a whole review, Q&A, or article,
then just
grab one of these ready-to-use promo blurbs and slot it in where you
have space. Thank you for spreading the word about The Great Housing
Bubble!
Has your house dropped in value? Do you want to know why? The Great Housing Bubble has the answers. The book documents the meteoric rise and catastrophic
fall of housing prices across the country. For more information on the
book, visit www.thegreathousingbubble.com/. The author of The Great Housing Bubble, Lawrence Roberts, lives in
Irvine, California with his wife and son where he witnessed the rise
and fall of residential home prices from ground zero of the housing
bubble.
Why did house prices fall? The Great Housing Bubble documents both the mechanical and psychological causes of the largest
increase and subsequent fall of house prices in United States history.
The book is a combination of academic analysis and historical account.
For more information, visit www.thegreathousingbubble.com/.
Lawrence Roberts, the author, witnessed the housing bubble from Irvine,
California, the center of the subprime universe and ground zero of the
housing bubble.
Has the drop in house prices left you wondering why it happened?
There is a book that explains this difficult subject in
easy-to-understand terms: The Great Housing Bubble. The mechanics of the bubble are explained in detail, and the book also
details the interesting buyer psychology that drove prices to dizzying
heights. For more information on the book, visit www.thegreathousingbubble.com/.
Lawrence Roberts, the author of The Great Housing Bubble, lives in
Irvine, California, which was ground zero of the housing bubble and
center of the subprime universe.
FOR IMMEDIATE RELEASE - Mar 21st, 2009
Irvine, Calif., Mar.
21, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
notes that there are a number of factors that will influence the timing and the
depth of the price decline which include:
Smaller
Debt-to-Income Ratios
Increasing Interest
Rates and Tightening Credit
Higher Unemployment
Foreclosures
Decrease in
Ownership Rates
Government
Intervention
Roberts observes
that smaller debt-to-income ratios impact the market because buyers tend to put
a smaller percentage of income toward housing payments during price declines. He
also notes that increasing interest rates decrease the amount borrowers can
finance and use to bid on real estate, and tightening credit decreases the size
of the borrower pool and thereby lowers demand.
Roberts says, “A
deteriorating economy and higher rates of unemployment means there are fewer
buyers with the income to purchase homes, and more homeowners are put in
financial distress. High rates of financial distress caused by unemployment or
the resetting of adjustable rate mortgages in a higher interest rate
environment leads to more foreclosures. Large numbers of foreclosures adds to
market inventories and works to push prices lower.”
Roberts opines that
the ultimate unknown factor is the meddling of the US Government in the
financial markets because a bailout program for homeowners or lenders could
radically alter the course of price movement.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Mar.
14, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
notes that all methods of predicting future price action rely on the same basic
premise: prices are tethered to some fundamental value, and although prices may
deviate from this value for extended periods of time, prices eventually return
to fundamental valuations. He observes that this premise has been reinforced by
market observation, and many estimates of fundamental value are based on market
action. Roberts also remarks that many market participants believe in buying
and selling based on fundamental values, there is also an element of
self-fulfilling prophecy contained therein.
Roberts opines that
the challenge to market prognosticators is to select a fundamental valuation to
which prices will return, and then extrapolate a period of time in which the
re-turn of prices to fundamental valuation will take place.
In The Great
Housing Bubble, Roberts uses historic price action, price-to-income
relationships and price-to-rent ratios to project future house prices. He describes
that he efficient markets theory is based on this idea, and although the
behavioral finance theory is needed to explain the wide deviations from
fundamentals real-world prices exhibit, both theories share the same notion of
an underlying fundamental valuation on which prices are ultimately based.
If Roberts is
correct in his analysis, the national prices, which peaked at an approximate
value of $246,000 in 2006, should bottom out at around $196,000 in 2011, and if
fundamental appreciation rates hold, they will reach the previous peak in 2018.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Mar.
7, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
comments in the book that both efficient markets theory and behavioral finance
theory can be useful in explaining market activity, but only behavioral finance
elucidates the irrational behavior of a financial mania.
The efficient
markets theory is the idea that speculative asset prices always incorporate the
best information about fundamental values and that prices change only because
new information enters the market and investors act in an appropriate, rational
manner with regards to this information.
Behavioral Finance looks
to psychology to explain asset valuation and why prices rise and fall. The
primary representation of market behavior postulated by behavioral finance is
the price-to-price feedback model: prices go up because prices have been going
up, and prices go down because prices have been going down.
Roberts notes that
the efficient markets theory does explain the behavior of asset prices in a
typical market, but when price change begins to feedback on itself, behavioral
finance is the only theory that explains this phenomenon.
In discussing the
psychological stages of a housing bubble, Roberts observes that once a bubble
starts to form, it will go through several identifiable stages: enthusiasm,
greed, denial, fear, capitulation, and despair. He says Each of these stages is
characterized by different speculator emotional states and different resulting
behaviors, and there are outside forces that also act on the market in predictable
ways in each one of these stages. Roberts opines that most often, these outside
factors serve to reinforce the market’s herd behavior and exacerbate changes in
price.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Dec.
27, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
details the calculation of the fundamental value of real estate. Roberts notes,
“To identify a housing bubble requires a yardstick to measure prices against.
Price-to-rent ratios and price-to-income ratios provide this basis.” In the
book, he examines many variables that move prices and identifies the primary
mechanisms of price movement as well as secondary price influences.
In a series of
calculations using a technique known as discounted cashflow analysis, Roberts
quantifies the investment premium buyers can pay above the fundamental value
and still obtain a return on their investment. He observes, “During the bubble,
people were paying a premium 100% higher than fundamental valuations in some
markets. A rational premium is about 10% at best. The markets were clearly
showing signs of irrational exuberance.” Some markets in California saw greater
than 50% declines in home prices between 2006 and 2008.
Roberts comments
that many people who thought they were investors were really speculators with
an ill-defined exit strategy. In the book, he defines investors as people who
acquire assets for is probably cashflow, whereas speculators are people who
acquire assets because they believe future sales prices will be higher. Roberts
opines, “Homeowners were behaving as speculators, but they believed they were
investors because they intended to own the house indefinitely. The long period
of ownership does not make them investors; it makes them speculators without a
plan.” Many individual homeowners and institutional lenders lost a great deal
of money in the deflation of the housing bubble.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Feb.
21, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
explains the mysterious and often misunderstood basis for raw land value.
Roberts explains, “The valuation of lots and raw land requires a detailed
knowledge of house construction and marketing costs as well as a good estimate
of the sales price of the final product: a residential housing unit. In short,
the value of a lot is the total revenue (sales price of the home) minus the
costs of production and the necessary profit. Land value is a residual
calculation.”
Roberts explains
that most of a builder’s cost of production is fixed; therefore, most of any
increase or decrease in the final sales price of the home either adds or
subtracts from a builder’s profits. He notes that the dramatic rally in home
prices caused the builders to make unusually large profits, and the dramatic
fall in home prices caused builders to lose unusually large amounts of money as
well.
Roberts notes, “The
people who were actively investing in land development during the bubble made
more money than most of us can imagine. The extreme sensitivity of these
investments to changes in home sales price resulted in properties obtaining
sales multiples of 10 times or greater in just a few years.Many homeowners who either accidentally or
by design timed the market well made huge windfalls during the bubble; however,
the real action was in land development.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine,
Calif., Feb. 14, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
believes the members of National Association of Realtors (NAR) should be
subject to oversight by the Securities and Exchange Commission (SEC) due to the
false statements they routinely make concerning the investment potential of
residential real estate. Financial services professionals are strictly
regulated as to the representations they can make regarding the financial
performance of certain investments by the SEC. Roberts believes their
activities should be similarly regulated since the false investment
representations of the NAR contributed to the housing bubble.
The list
of common falsehoods provided by Roberts includes classics like:
It is a good time
to buy!
Hurry. This one
won't last.
Don't throw away
your money on rent.
They are not making
land anymore.
This property is
priced at below market value.
Don't worry about
the asking price - just offer what you're willing to pay.
Don't worry. You
can afford this house.
Trust me.
It’s not just the
commission. I really care about you.
It is the opinion
of the author that “in a buyer’s market these ploys are all lies (the
truthfulness of these statements is questionable in all market conditions).
Generally, the buyer is the only prospective buyer, and they can take as long
as they want to buy the house. The buyer’s task in negotiating is to create a
sense of urgency and panic in the seller. This is why buyers should make their
first offer their best offer.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Feb.
7, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
describes the meteoric rise and catastrophic fall of house prices in the United
States as a financial mania. In the book, he illustrates the typical beliefs of
a financial mania and demonstrates how these same delusions overtook buyers in
the housing market.
Roberts
characterizes the mechanics of a financial mania this way, “A financial bubble
is a temporary situation where asset prices become elevated beyond any
realistic fundamental valuations because the general public believes current
pricing is justified by probable future price increases. If this belief is
widespread enough to cause significant numbers of people to purchase the asset
at inflated prices, then prices will continue to rise. This will convince even
more people that prices will continue to rise. This facilitates even more buying.
Once initiated, this reaction is self-sustaining, and the phenomenon is
entirely psychological.”
Roberts goes on to
note that all financial manias have an abrupt and catastrophic end, “When the
pool of buyers is exhausted and the volume of buying declines, prices stop
rising; the belief in future price increases diminishes. When the remaining
potential buyers no longer believe in future price increases, the primary
motivating factor to purchase is eliminated; prices fall. The temporary rise
and fall of asset prices is the defining characteristic of a bubble.”
Between 2000 and
2006 Home prices increased 45% nationally, and in California home prices
increased 135%. This increase did not correlate with increases in wages, rents,
or general price inflation.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Jan.
31, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
notes that academics largely missed the housing bubble. He quips, “It is
amazing to this author how so many academics along with the general public can
completely miss financial bubbles and deny their existence past the point where
it is obvious to everyone.”
The Great Housing
Bubble documents several cases where academics wrote articles at or near the
peak of the housing bubble where they contended prices were supported by
fundamentals. Roberts found this very surprising, “Even at the very peak of the
insanity, there are well-educated market observers that miss the signs or
believe the fallacies which serve to inflate the bubble.” In one paper Roberts
found this statement: “Thus, what appears to be a bubble in some markets might
just be a reflection of normally high volatility in those markets.” Roberts
jokes, “This is like saying ‘what appears to be a bubble isn’t a bubble because
bubbles are normal in these markets.’ When the authors can look right at the
data and not understand what they are seeing, there is little hope the paper
will draw the right conclusions.”
Roberts speculates
that many academics may have been homeowners who did not want to see the
housing bubble. He notes, “Many market prognosticators lose their objectivity
in data analysis the moment they take a position in the market they are
studying.” Roberts observes that the failure of academics may also be because
they are viewing markets from a faulty paradigm. The Behavioral Economists like
Robert Shiller saw this coming, but many who still subscribe to the tenets of Efficient
Markets Theory completely missed the bubble.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Jan.
24, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
carefully documents how a shift in lender practices and incentives is one of
the primary mechanisms for inflating the housing bubble. Roberts observes, “As
the secondary mortgage market continued to grow, lending institutions began to
sell the loans they originated rather than keeping them in their own
portfolios. The banks began to make money by originating and servicing loans
rather than by keeping them and earning interest. This was a radical change in
lending practices and incentives; lending institutions stopped being concerned
with the quality of the loans because they did not keep them, and instead they
became very concerned with the volume of loans originated and the fees these
generated.”
Roberts opines that
the change in incentives resulted in an inevitable lowering of lending
standards and the growth of subprime. He notes, “The originators were only
concerned with meeting the parameters set forth by buyers of mortgage backed
securities in the secondary market. When the parties purchasing these loans
reduced standards to the point where everyone qualified, loan originators gave
everyone loans.” He is guarded about blaming subprime lending for the bubble, “The
problems surfaced in subprime, but there certainly were not confined there. The
‘subprime containment’ theory was pure nonsense.”
Roberts goes on to
note, “The secondary mortgage market did not create the Great Housing Bubble,
but it provided the basic infrastructure to allow the delivery of capital that
caused house prices to take flight. The catalyst or precipitating factorfor the price rally was the Federal Reserve’s lowering of interest rates in
2001-2004.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Jan.
17, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
demonstrates the dramatic impact negative amortization loans had on house
prices. He opines, “Negative Amortization loans inflated the Great Housing
Bubble. If this loan product had not been offered and aggressively pushed by
lenders, the bubble would not have inflated to the degree that it did.” The
book describes how these loans work, and also why these loans failed.
The Option ARM (Adjustable
Rate Mortgage) was not the only toxic, “affordability product” developed and
widely used during the housing bubble. Interest-Only Adjustable Rate Mortgages
were very common. Roberts notes, “Interest rates have been on a steady decline
for well over 20 years. People using ARMs do not realize the interest rate
risks they are assuming. Most believe interest rates will continue to fall
forever.” Mortgage interest rates reached historic lows during the housing
bubble.
Roberts observes, “The
problems with subprime loans is widely reported and known, but the problems
with Option ARMs and Interest-Only ARMs given to borrowers with higher credit
scores was not front-page news in 2008. The impact of these loan programs will
be the big story of 2009.” He documents how these loans will recast and result
in much higher mortgage payments from 2009-2011. Roberts believes most of these
people will find the new payments unaffordable and will likely end up in
foreclosure. He says, “The foreclosure crisis is just beginning. First it was
subprime, but now it is going to be middle-class Americans who lose their
homes.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Jan.
10, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
identifies the root causes of the housing bubble as the following: “1. Separation
of origination, servicing, and portfolio holding in the lending industry. 2. Innovation
in structured financeand the expansion of the secondary mortgage
market. 3 The lowering of lending standards and the growth
of subprime lending. 4. Lower FEDfunds rates as an indirect and minor force.” He
believes the combination of these factors inflated the housing bubble.
In the book,
Roberts makes the case that housing prices went up because too much credit was
made available. He notes, “Lenders encouraged borrowers to take out loans under
unstable terms. When these borrowers began to default, the lenders stopped
lending, and we had a severe credit crunch. The reduction in lending and the
restriction of loan terms caused house prices to fall back to sustainable price
levels.” He believes this sequence of events will repeat if the system does not
change.
Roberts warns about
government intervention in the financial markets, particularly the credit
markets, “The Great Housing Bubble was not really about housing; it was about credit.
Housing just happened to be the asset class into which this capital flowed. It
could have been stocksor commoditiesjust as easily, and if the government gets too
aggressive in its actions to prevent a collapse in housing prices, the
liquidityintended to prop up real estate prices will
likely flow into some other asset class creating yet another asset price bubble.”
Roberts wonders when the government will stop trying to manipulate financial
markets, “We are on a path toward central planning and market control similar
to the old Soviet Union. This isn’t the America I used to know.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Jan.
3, 2009 – Lawrence Roberts, author of “The
Great Housing Bubble,”
illuminates some of the key beliefs of participants in the massive housing
Ponzi Scheme that caused the deep economic recession of 2008 and 2009. He
refers to these beliefs as a cultural pathology. According to Roberts, “There
are certain beliefs if widely held and acted upon by a group of people leads
inevitably to collective suffering and personal destruction. This is pathology.”
Roberts describes
the idea of “appreciation is income” by comparing the actions of the rich
versus the poor: “The rich view home price appreciation as adding to their net
worth. Poor people view home price appreciation as income; free money for them
to spend.” He notes that the rich did not spend their appreciation and did not
lose their houses when prices fell; however, the poor did spend the
appreciation and most often lost their houses in foreclosure.
Roberts illustrates
the difference between rich and poor in their beliefs about savings and credit,
“The rich will use credit sparingly and most often pay off any credit balances
each month as the bill comes due. In contrast, the poor carry as much consumer
debt as they can afford to service. Whenever they receive an increase in a
credit line, they believe they have more money to spend, just like it was
savings.” He contends this debt-service mindset fueled by artificially low
interest rate offers created buyer demand that inflated the housing bubble.
Roberts opines, “There
are a great many homeowners who live in big houses, and they believe that makes
them rich. To them, the possession and use of an expensive house makes them
wealthy even if they have no equityin the property. ” He further notes, “The rich
buy less home than they can afford and work to pay off the debt in order to
maximize their net worth. The poor stretch their finances to possess more home
than they can afford with loan terms which never retire the debt, or in the
case of negative amortizationloans, actually increases their debt held
against the property. ” Roberts contends this false illusion of wealth prompted
many buyers to overextend themselves to buy properties they could not afford
which ultimately lead to foreclosure.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Dec.
27, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
details the calculation of the fundamental value of real estate. Roberts notes,
“To identify a housing bubble requires a yardstick to measure prices against.
Price-to-rent ratios and price-to-income ratios provide this basis.” In the
book, he examines many variables that move prices and identifies the primary
mechanisms of price movement as well as secondary price influences.
In a series of
calculations using a technique known as discounted cashflow analysis, Roberts
quantifies the investment premium buyers can pay above the fundamental value
and still obtain a return on their investment. He observes, “During the bubble,
people were paying a premium 100% higher than fundamental valuations in some
markets. A rational premium is about 10% at best. The markets were clearly
showing signs of irrational exuberance.” Some markets in California saw greater
than 50% declines in home prices between 2006 and 2008.
Roberts comments
that many people who thought they were investors were really speculators with an
ill-defined exit strategy. In the book, he defines investors as people who
acquire assets for its probable cashflow, whereas speculators are people who
acquire assets because they believe future sales prices will be higher. Roberts
opines, “Homeowners were behaving as speculators, but they believed they were
investors because they intended to own the house indefinitely. The long period
of ownership does not make them investors; it makes them speculators without a
plan.” Many individual homeowners and institutional lenders lost a great deal
of money in the deflation of the housing bubble.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Dec. 20, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
provides valuable insight for those sellers who owe more than their house is
worth. Foreclosures, short-sales, deed in lieu, and other real estate
transactions where the debt is not paid in full have become very common with
the deflation of the housing bubble.
Roberts
notes that sellers have only four options: 1. The borrower can keep making the
mortgage payments until prices go back up. 2 . The borrower can bring cash to the closing
to pay off the portion of the mortgage not covered by the proceeds from the
sale. 3. The borrower can try to
convince the lender to agree to a short sale. A short sale is a closing where
the lender accepts less than the full mortgage amount at the closing. 4. The
borrower can simply stop making payments and allow the property to go to public
auction in foreclosure. He further comments that both
short sales and foreclosures have strongly negative impacts on credit scores
and the availability of credit in the future.
Roberts also
describes recourse versus non-recourse lending, judicial versus non-judicial
foreclosure, and the tax implications of debt forgiveness. Roberts opines, “It
is unfortunate that so many sellers find themselves in this position. They don’t
have any good options. The challenge is to select the option that is least bad.
I hope the information presented in the book helps underwater homeowners
understand the decisions they face.”
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine, Calif., Dec.
12, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
observes that “In a buyer’s market, the buyer has the power in a negotiation.
Buyers should take advantage of this power and negotiate the lowest possible
price. Since the price determines the loan amount and often the taxes on the
property, the buyer benefits through lower interest costs and lower taxes by
minimizing the purchase price.”
Roberts advises
buyers to make their first offer their best offer. He says, “This is the most
counter-intuitive part of buying in a buyer’s market. Ordinarily sellers, or
more accurately the seller’s realtor, try to create a sense of urgency to buy
the house.” He goes on to outline the procedure for buyers to pay the lowest
possible price for real estate.
When
asked about his motivation for writing “The
Great Housing Bubble,”
Roberts responded, “Sellers have the marketing machine of the National
Association of Realtorsto help them. Buyers have few sources of
unbiased information to assist their decision. Part of the purpose of this
writing is to educate both buyers and sellers on the realities of the
residential real estate market.”
Roberts
has not been popular with the National Association of Realtorssince he suggested that realtors should be
subject to oversight by the Securities and Exchange Commission regarding the
false statements they routinely make concerning the investment potential of
residential real estate.
About the Author, Publisher and
Book
Lawrence Roberts,
author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point
in Irvine, Calif. – the center of the subprime universe – Roberts carefully
documents in his book the conditions and practices that inflated the largest
real estate bubble in history. He holds a Master of Science in Land Development
from Texas A&M University, and he consultants to the land development
industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine,
Calif., Nov. 19, 2008 – Bestselling author, Jim Randel, has this to say about “The
Great Housing Bubble,”
“A very well-written and thoughtful analysis of what went wrong in the housing
world and how we can avoid this problem in the future. Lawrence Roberts
has a great understanding of the subject and does an excellent job
communicating his ideas to the reader.”
Monterey Cypress Publishing, a small press
specializing in real estate and personal finance related books, audio books,
and video presentations, has an exclusive agreement to publish the works of
Lawrence Roberts. His first book, The Great Housing Bubble, details the causes
of this historic crisis.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related
books, audio books, and video presentations.
Irvine,
Calif., Oct. 27, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble proposes a series of changes to our current system of appraisal, lending and
sales of residential real estate.
Roberts
contends our system of property appraisal needs to be overhauled to rely on
valuations based on a properties potential rental income. He notes that the
current system using the comparative sales approach merely verifies and
perpetuates irrational exuberance. Roberts believes this one change by itself
would prevent future housing bubbles.
Roberts
states that lending standards need to be tighter to ensure those who are loaned
money to purchase real estate can comfortably afford the payments necessary to
sustain ownership. He purports the problem with housing is not foreclosures but
defaults because foreclosures are the end result of a problem that begins with
defaults.
Roberts
believes the documentation standards of residential loans needs to be improved
with both parties having more stringent civil and criminal penalties for
lending outside of reasonable standards or committing fraud or
misrepresentation on a loan application. He argues that fraud and
misrepresentation on both sides of the transaction created a lack of investor
confidence that brought down the secondary mortgage market.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine,
Calif., Oct. 20, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
believes the members of National Association of Realtors (NAR) should be
subject to oversight by the Securities and Exchange Commission (SEC) due to the
false statements they routinely make concerning the investment potential of
residential real estate.
Roberts
notes that financial services professionals are strictly regulated as to the
representations they can make regarding the financial performance of certain
investments by the SEC because of the practices of these professionals during
the stock market bubble of the 1920s. He believes the activities of the National
Association of Realtors should be similarly regulated since the false
investment representations of the NAR contributed to the housing bubble.
Roberts
says this would be easy to accomplish. The SEC needs merely to classify
residential real estate as an investment, and the NAR would be under the
jurisdiction of the SEC. Roberts believes that preventing the gross
misrepresentations the NAR makes concerning the investment performance of
residential real estate would help prevent future housing bubbles.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the
housing price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in
real estate and personal finance related books, audio books, and video
presentations.
Irvine,
Calif., Oct. 15, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
claims the main problem with all bailout plans is the moral hazard they create.
It is his opinion that those who did not participate in the bubble and instead
behaved in a prudent manner would be penalized at the expense of those who were
cavalier about risk. In one form or another either through free market impacts
or direct subsidies from the government paid by tax dollars, these bailout
plans all ask the cautious to support the reckless.
Roberts
observes that many homeowners held out hope that if they could just keep
current on their mortgage long enough, the government would come to their
rescue in the form of a mandated bailout program. According to Roberts, part of
this fantasy was not just that people could keep their homes, but that they
could keep living their lifestyle as they did during the bubble. He notes that
few borrowers seem to realize was any government bailout program would be
designed to benefit the lenders by keeping borrowers in a perpetual state of
indentured servitude, and with all their money going toward debt service
payments, little was going to be left over for living a life.
Housing
bailout proposals are part of the myriad of issues surrounding the housing
bubble. Roberts discusses each of these issues in detail in the book, “The
Great Housing Bubble.”
About the Author
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Irvine,
Calif., Oct. 13, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
believes the members of National Association of Realtors (NAR) should be
subject to oversight by the Securities and Exchange Commission (SEC) due to the
false statements they routinely make concerning the investment potential of
residential real estate. Financial services professionals are strictly
regulated as to the representations they can make regarding the financial
performance of certain investments by the SEC. Roberts believes their
activities should be similarly regulated since the false investment
representations of the NAR contributed to the housing bubble.
Roberts
proposes a series of changes to our current system of appraisal, lending and
sales of residential real estate. He contends our system of property appraisal
needs to be overhauled to rely on valuations based on a properties potential
rental income rather than merely verifying and perpetuating irrational
exuberance by using the comparative sales approach. Lending standards need to
be tighter to ensure those who are loaned money to purchase real estate can
comfortably afford the payments necessary to sustain ownership. The
documentation standards of residential loans needs to be improved with both
parties having more stringent civil and criminal penalties for lending outside
of reasonable standards or committing fraud or misrepresentation on a loan
application.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related
books, audio books, and video presentations.
Irvine,
Calif., Dec. 1, 2008 – “The Great
Housing Bubble: Why Did House Price Fall?” contends that a combination of loose
lending standards and irrational exuberance on the part of borrowers created a “herd
mentality” that drove prices beyond any reasonable valuation measure. The
author provides detailed information on the phenomenon of irrational
exuberance, the mechanics of lending, the proper valuation of residential real
estate, the role of psychology in housing markets, predictions for how the
bubble will deflate and so much more. Roberts believes the pain and anguish
caused by the foreclosures and bankruptcies resulting from the deflation of the
housing bubble was an avoidable occurrence – if the housing bubble had not been
permitted to inflate.
He
proposes a series of changes to our current system of appraisal, lending and
sales of residential real estate. He contends our system of property appraisal
needs to be overhauled to rely on valuations based on a properties potential
rental income rather than merely verifying and perpetuating irrational
exuberance by using the comparative sales approach. Lending standards need to
be tighter to ensure those who are loaned money to purchase real estate can
comfortably afford the payments necessary to sustain ownership. The
documentation standards of residential loans needs to be improved with both
parties having more stringent civil and criminal penalties for lending outside
of reasonable standards or committing fraud or misrepresentation on a loan
application.
Finally,
Roberts believes realtors should be subject to oversight by the Securities and
Exchange Commission regarding the false statements they routinely make
concerning the investment potential of residential real estate.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related
books, audio books, and video presentations.
Irvine,
Calif., Oct 9, 2008 –Monterey
Cypress Publishing has contracted with CreateSpace.com, an Amazon.com
subsidiary, and Lightning Source, an Ingram subsidiary, to print “The
Great Housing Bubble.”
“We are very pleased with these agreements,” says a representative at Monterey
Cypress Publishing, “The production costs are low, the quality is high, and the
service is excellent.”
The
agreement with CreateSpace.com provides for distribution through Amazon.com.
The agreement with Lightning Source provides wholesale distribution through
Ingram. This puts “The Great Housing Bubble” on Barnes & Noble online,
and it opens the bookstore market. “The agreement with Ingram/Lightning Source
is particularly powerful,” says a representative at Monterey Cypress Publishing,
“the Ingram distribution channel gets the book into bookstores and makes it
available to other online retailers.”
Monterey Cypress Publishing, a small press
specializing in real estate and personal finance related books, audio books,
and video presentations, has an exclusive agreement to publish the works of
Lawrence Roberts. His first book, The Great Housing Bubble, details the causes
of this historic crisis.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related
books, audio books, and video presentations.
Irvine,
Calif., May. 15, 2008 – Lawrence Roberts, author of “The
Great Housing Bubble,”
joins with Monterey Cypress
Publishing in a long-term agreement to publish a series of books on the
housing crisis. “I am very excited about this opportunity to work with a great
publisher,” says Roberts, “and I look forward a successful ongoing
relationship.”
In his
first book, “The Great Housing Bubble,” Roberts contends that a
combination of loose lending standards and irrational exuberance on the part of
borrowers created a “herd mentality” that drove prices beyond any reasonable
valuation measure. He provides detailed information on the phenomenon of
irrational exuberance, the mechanics of lending, the proper valuation of
residential real estate, the role of psychology in housing markets, predictions
for how the bubble will deflate and more. Roberts believes the pain and anguish
caused by the foreclosures and bankruptcies resulting from the deflation of the
housing bubble was an avoidable occurrence – if the housing bubble had not been
permitted to inflate.
Roberts
proposes a series of changes to our current system of appraisal, lending and
sales of residential real estate. He suggests realtors be subject to oversight
by the Securities and Exchange Commission regarding the false statements they
routinely make concerning the investment potential of residential real estate.
About the Author and Publisher
Lawrence
Roberts, author of “The Great Housing Bubble,” is known as the Housing Bubble Cassandra. He publicly predicted the housing
price crash as the primary writer for the Irvine
Housing Blog. From
his unique vantage point in Irvine, Calif. – the center of the subprime
universe – Roberts carefully documents in his book the conditions and practices
that inflated the largest real estate bubble in history. He holds a Master of
Science in Land Development from Texas A&M University, and he consultants
to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related
books, audio books, and video presentations.
