With the stabilization of Android Architecture Components I started updating all my basic ViewModels to the new implementation ofViewModel. In my understanding,
The Android Studio 3.1 (currently in Canary 6) will fix this issue, since LiveData can be used as observable field:
Updates to Data Binding:
You can now use a LiveData object as an observable field in data binding expressions. The ViewDataBinding class now includes a new setLifecycle method that you need to use to use to observe LiveData objects.
Source: Android Studio 3.1 Canary 6 is now available