Posts by Eddie
Intro to: The Missing Keys to Thriving in Any Real Estate Market
The book you hold in your hands can assure your success as a real estate professional. It offers you an amazing insight into the landmines which are in large part responsible for the real estate debacle we see now and it also introduces you to a never before available tool – The Home [...]
False Assumption 4: Appraisals and MLS information are adequate to assess local risk and make a buying decision.
Home buyers and investors often make their home purchase and property investment decisions based solely on appraisals and MLS-based information about housing prices. They assume that those sources provide accurate and reliable information that reflects the true market value of the properties they intend to buy, and all relevant current local information. However, this [...]
False Assumption 3: The system of Gaussian copula function was adequate and reduced risk of MBS.
The Gaussian copula function, developed in early 2000s by the mathematician David Li, appeared for many financial institutions as an excellent tool to standardize and simplify the risk assessment process. This regression model allowed for complex risks to be modeled into a simple function that made it easy for credit analysts to determine the risk [...]
False Assumption 2: Existing Systems for Risk Management, such as FICO Scores and Rating Agencies, Are Adequate.
To a large extent, the current housing market downturn is the consequence of exceptionally lax lending standards that amidst ample liquidity resulted in the creation of a housing bubble. The bubble burst once the unsustainable and artificially-inflated prices eroded affordability and the economic slowdown caused many borrowers with weak credit quality to default on their [...]
False Assumption 1: Real Estate Has Always Gone Up in Value, Thus It Will Continue to Go Up in Value
What Caused the Housing Crisis – False Assumption 1: Real Estate Has Always Gone Up in Value, Thus It Will Continue to Go Up in Value
Seven False Assumptions – That Caused the Housing Crisis
Seven False Assumptions – That Caused the Housing Crisis
How did macroeconomics and flawed Market Information cause The Housing Crisis? – Part 3
Macroeconomics Role in the Housing Crisis – Part 3
Not only did the macro data (with huge flaws at the local level), fail to foresee the crisis, but also the flawed macro data was “presumed” to be a trend line to extend into the future. A good example of this is at CNN Money [...]
Macroeconomics Role in the Housing Crisis – Part 2
In part 1, we learned that necessary data to make good real estate investment decisions has been lacking. If we look deeper we can see the problem revealed.
Statistically the MSA’s (Metropolitan Statistical Area) with the largest populations have the largest errors. This only makes sense since you will find a greater diversity as a larger [...]
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