patrick.net

Yep. Market got slapped alright.

Prices sure fell, anarchy in the streets and all.

Good work, good work.

Logan Mohtashami says

Yep. Market got slapped alright.

Prices sure fell, anarchy in the streets and all.

Good work, good work.

Roberto :-)

The passion you have for me, I love it

In regard to this article

Ivy Zelman came national TV and said new home sales were about to rip into a Nirvana stage

Her 25% Sales estimate got dinged as soon as Rates rose in 2013

But her core thesis was that rates could rise 2 full basis point and the demand curve wouldn't be hit at all

OUCH

Then she did the worst thing possible she came on T.V. in 2014 as Said New home sales were going to be up 25% again and said Nirvana

Which lead to this article

http://loganmohtashami.com/2014/04/11/miss-housing-nirvana-crys-uncle/

NickTimiraos from the Wall Street Journal

https://twitter.com/NickTimiraos

Nick Timiraos ‏@NickTimiraos
Zelman existing home sales forecasts: 2014 at 4.8M (vs earlier 5.4M); 2015 at at 4.9M (vs 5.7M); 2016 at 5.0M (vs 5.9M). 2013 was 5.09M.

Nick Timiraos ‏@NickTimiraos
Ivy Zelman slashes existing home sales forecast: now -5% for 2014, vs earlier +6% forecast. New home sales forecasts unchanged.

In less than 61 days

Ivy Zelman cut all her forecast for existing home sales but kept her 25% sales growth call for 2015

Which ended only up 2% it was her biggest miss in an up cycle ever recorded

Ouch Ouch Ouch, she hasn't been on CNBC since that day

Under her metrics back in 2013 new home sales should be near 800K

Today the print was 552K

That is now -7% headline below 1963 levels
Negative 45% below 1963 adjusting to population

There has never been a more weaker demand curve post WWII at the lowest rate cycle post WWII

I want to feed your obsession More photos for you, I can't send you nudes because I am married so you need to have a big imagination

Now this one might get you hot

Not only did mortgage rates rising impact the demand curve for 2013/2014

For the first time ever recorded in American economic history

Higher rates, yes even 4.5% created the first bear market in purchase application ever in a up cycle with rates this low, which lead to a

21st century low in 2014

Negative year over year sales in 2014 even with rising inventory and rates falling from the peak of 4.5%

But for new home sales the estimated range of 20%-33% only came in at 2% growth.

Never has their been a bigger home sales miss both new and old, something In my 2014 prediction article, please look that up :-)

As you can in 2014 we hit a brand new low this century for purchase applications at rates of 4.5% -4% adjusting to population it was the worst purchase applicaiton number ever recorded in American economic history

On May 7, 2013 that was what I warned everyone about the demand curve. This is the main reason why everyone asks for me to be interviewed and I get to go to economic conference

PITI + DTI + LTI Housing factor inflation model based on economic equilibrium

http://loganmohtashami.com/2013/05/07/housing-mammoth-stuck-in-tar-has-bigger-problems-to-worry-about/

Bring it on Baby... keep on looking back!!!! nothing but love for you Roberto...

I love this game

Pat.net really seems to attract some oddballs. Logan--I think you have set a new bar for self-absorption. In the future, if anyone asks me what a douche-bag is, I'll direct him to your posts on here.

As others have posted on here--very, very few people in the real world care about # of sales. People care about what prices are going to do. You spend way too much time analyzing meaningless data and not enough time analyzing the important stuff. And, even when you do, you cannot draw the right conclusion because you only have a cursory understanding.

You're good at posting pictures of yourself though-I'll give you that. How much time do you spend taking selfies, anyway?

It's hard to say bitch slap when the renters are puking.

No one cares about sales except economists. The economy would not be bitch slapped because of demand of housing now anyway so you metric is completely no value. when homes sales were crappy, the market (housing price) just bitch slapped by doubling.

What you're doing Roberto is creating a false narrative to have a discussion which the facts don't actually supported your thesis
Also, you're imply that when inventory broke under 6 months I said priced would fall which if you look at 2013,2014 and 2015 Housing predictions
all were positive.

False narrative to create a thesis that doesn't exist.
Let me prove your facts wrong

blastfrompast says

1. we don't have higher rates.

10's were at 1.60% 2013 then moved to 3.04% which brought rates from 3.5% to 4.5%

Evidence #1

Correlation

Existing home sales prediction of 5.7 to 5.8 million for 2014
New Homes sales of 20% -33%

2014 New home sales only grew at 2% , even I got that wrong as I thought we could at least muster up 8% sales growth
2014 Existing home sales went negative year over year
The first time ever recorded in American economic history that sales went negative with rates this low in a up trending cycle

Another fact you got wrong

blastfrompast says

Only you would call that "getting slapped"

The quote was made for Ivy Zelman ( #1 Housing Analyst) who said sales demand would never be hit when rates rise
Her new home sales missed by 23% in 2014 she blamed higher rates which threw here entire Housing Nirvana thesis out the door

blastfrompast says

. Gold hasn't skyrocketed

I am not a Gold Buy or a hyperinflation bug you got the wrong person

and as always, you're missing the truth that as soon as my model got hit home prices would rise
As always you 100% don't mention that because what do you have left to argue about?

Mortgage Purchase Applications in 2015 are the 2nd lowest level adjusting to population ever recorded

The last new home sales were this low adjusting to population was back in early 1980's when rates were double digits

You're creating a false thesis to have a conversation which now you're picking out a year which even I said prices would rise.

:-)

tsk tsk

You're out of ammunition now... but please keep this up, I like this conversation, it's shows that my core thesis that we simply don't have enough qualified home buyers X out cash buyers for this cycle stayed the entire cycle

tatupu70 says

Pat.net really seems to attract some oddballs. Logan--I think you have set a new bar for self-absorption. In the future, if anyone asks me what a douche-bag is, I'll direct him to your posts on here.

My lady I always enjoy your views on myself

False narrative is saying that a model for home prices rising would fail

Which wasn't the case,

Whenever inventory breaks under 6 months home prices rise, we saw a 20% decline in 2012 which got to the low point of the cycle in Spring of 2012

It's assuming that I said in 2013, 2014 and 2015 prices would decline with my own model that I used for home price

If this doesn't whiff of desperation, I don't know what is, which in theory is saying that I disagreed with myself

Be my guest go look up Housing Prediction 2013, 2014 and 2015 all have price gains because inventory is low and distress sales are falling to conventional sales

Math, Facts and Data matter, because unlike you guys and gals I can't hide behind a fake name ever, I have to tell the truth

SFace says

No one cares about sales except economists. The economy would not be bitch slapped because of demand of housing now anyway so you metric is completely no value. when homes sales were crappy, the market (housing price) just bitch slapped by doubling.

Another false narrative

I can't believe, it's like no one ever reads, you're making the assumption that I said home prices would fall when my own metric said it's time to rise.
Again, just look at the Housing Prediction Articles once inventory broke under 6 months, every single one was positive

You're just making up lies, Inventory was over 6 months going into 2012, and then just collapse in the spring of 2012, that's when home prices have leverage for gains.

As long as inventory stays low you have pricing power because we don't have new distress homes coming to the market place, the only way that happens is a job loss recession, which none of the data shows

Again, you're saying a lie for the sake of a debate, which means you're implying I am debating myself :-)

You can do that hiding behind a fake name always and I can't, I don't have that luxury ever

Even if median sales prices fall for new homes in 2015, that doesn't mean the demand curve is bad from 2014 to 2015, You have growth in new home sales this year because we set very low bar from last year

it's just the mix up sales data for a 500K market has a bit more lower end homes in it.

Inventory is low for new homes as well, gives it pricing power

Adjusting to inflation we are above the Bubble high by 1% but the sales demand curve is tilted for the upper income buyer and at 500K sales total for 2015 it's not a bad thing

Logan Mohtashami says

You can do that hiding behind a fake name always and I can't, I don't have that luxury ever

Logan Mohtashami says

Math, Facts and Data matter, because unlike you guys and gals I can't hide behind a fake name ever, I have to tell the truth

You do have the option to use a pseudonym online. Using your actual name doesn't de-facto give your arguments more credibility. You are trying to build a brand persona, and it is very much in your own self interest to use your full name.

Currently (2015) -- Sales volume is low, prices are high and going higher (in my area). This was talked about in January/Feb on Pnet already by many others.

This is the summation of your article from 2013 ....
"So, I believe July existing home sales will most likely be the peak for 2013. Moving forward, if the cash buyer doesn’t pick up the slack from the mortgage buyers then the pace of sales will take a hit and with more supply coming to the market place we have seen a softening on price gains as well."

So the thread necromancy here is showing people that your prediction wasn't correct. Right?

It's probably just me since I'm not an RE investor, but I never find much use in what you post here on Pnet. Others seem to make better observations, with more economy of words, and hide less behind an overdose of graphs. I think if you worked on more concision in your communication, it could help build your brand and message more. As it stands now, you seem to say much, without saying anything of meaning. I think that is the criticism being directed at you in other, less constructive, ways.

Logan Mohtashami says

Whenever inventory breaks under 6 months home prices rise, we saw a 20% decline in 2012 which got to the low point of the cycle in Spring of 2012

It's assuming that I said in 2013, 2014 and 2015 prices would decline with my own model that I used for home price

If this doesn't whiff of desperation, I don't know what is, which in theory is saying that I disagreed with myself

I'm not saying you disagreed with yourself, honey. Only that you don't focus on the right data and don't know how to interpret it when you do.

Logan Mohtashami says

Be my guest go look up Housing Prediction 2013, 2014 and 2015 all have price gains because inventory is low and distress sales are falling to conventional sales

Math, Facts and Data matter, because unlike you guys and gals I can't hide behind a fake name ever, I have to tell the truth

Not really. Truth tends to not matter much to slick talkers, like yourself. You can fool a lot of people most of the time. I'm just not one of them.

Rew says

So the thread necromancy here is showing people that your prediction wasn't correct. Right?

No

Because for 2015 I had demand sales growth in every single data point because to have double regressive trend line data in year 7 with rates 4% would imply a peak affordability thesis, which I don't think is the case.

The longer the duration with demographics the more probability of a dual income household ready to buyer

1. For existing home sales – I predict we will see somewhere in the area of 5.0 million -5.20

2. For mortgage rates – I predict the 10 year note yield will be in a range of 1.60% – 3.04%, which means mortgage rates will be in the 3.50%-4.5% range

3. For mortgage purchase applications– I predict some growth on purchase applications year over year, because we are at century lows. By the end of March to the first 5 months of the year we will see how much real mortgage demand we will have in 2015. I expect 5%-10% gains for the year.

4. For the new home sector – I predict a replay of what we saw last year with a conservative estimate of 8% growth to an aggressive estimate of 12% growth
If builders decided to provide some real incentives and discounts for their products, it is possible they could increase sales dramatically in 2015, capturing more of the “average buyers” – but the discounts and incentives would need to be significant before new homes could compete with the existing home market –

( Above is the interesting part with price to sales metrics for new homes due to make up shift) This means a lower down scale of higher end homes actually, that's why prices aren't moving like it did in the past. You can do this with only 500K

That's 2015

Rew says

This is the summation of your article from 2013 ....

"So, I believe July existing home sales will most likely be the peak for 2013. Moving forward, if the cash buyer doesn’t pick up the slack from the mortgage buyers then the pace of sales will take a hit and with more supply coming to the market place we have seen a softening on price gains as well."

What happened in 2013.

Was that normally in a 5 year economic cycle with rates this low, sales would normally take off.

Once the taper started it created something very usually, 18 straight months of declines on purchase applications which lead to a first time every recorded in American economic history that sales went negative in a up cycle, even new home sales took the biggest miss on sales estimates ever recorded

So, I talk about economics, not investing, that's never my take

Nobody on patrick gets asked to talk to the media, no body here gets asked to go to economic conferences, nobody here gives interviews with real live economic data, why because nobody here has a real name

I can't do that, I can't just make up stuff, I can't say the housing is great when we have the lowest adjusted to population sales every recorded.

When I had to speak at the BNY mellon conference that was the number one question I got from Wall Street, Why are sales so low

This is why I have to only work with real data and I can't say names, or call people bad things, because what is said on the internet stays on the internet.

It doesn't matter to anyone here because no one has their real name, no one here gets asked to talk to the media, no one here gets asked to go to Wall Street Conventions, no one here gets asked to speak at economic conferences

So, you see my point.

If price is all that matters, I have given a model for that, the model worked, it still works

But there is no way anyone with a straight face can say the housing demand curve from main street is good in this cycle

Math, Facts and Data matter, the rest is storytelling

2015 2nd lowest adjusting to population purchase applicaitons ever recorded in Amerian History in year 7 with 4% rates

New home sales adjusting to population has never been this bad since the early 1980's and that is with rates below 5% since early 2011 and back then rates were high double digit

Like I said, It's about economics, you guys and gals care about prices then I have that model for you but economic equilibrium still means something to housing so the looking a recession, we still aren't close to one to bring in new distress home sales

tatupu70 says

I'm not saying you disagreed with yourself, honey. Only that you don't focus on the right data and don't know how to interpret it when you do.

My lady, that was just perfect statement from you! :-) tatupu70 says

Not really. Truth tends to not matter much to slick talkers, like yourself. You can fool a lot of people most of the time. I'm just not one of them.

So all the data chart I post didn't prove my core thesis that this housing cycle would have the worst demand curve from main street ever

Whistle

Think of rational of saying price is the only thing that matters for someone like me who follows all economic data.

That would imply all of you said 2003-2006 was legit, that price is the only thing that matters to housing economics, no need to concern yourself
on internal data reading, LEI, Claims, JOLTS, economic equilibrium

That one blew up

This cycle, low rates, 20% above historical cash buyers, worst mortgage demand curve adjusting to population ever

So, I can't work like that. I would be laughed at by economic community if I said the only thing that matters is price without looking at all the variables

It doesn't work that way, If you're all investors then you know exactly what I am talking about,

Logan Mohtashami says

So all the data chart I post didn't prove my core thesis that this housing cycle would have the worst demand curve from main street ever

Whistle

Nope-it actually doesn't. You assume that sales = demand. The implicit assumption, then, is that there is unlimited supply.

Fact--there is NOT unlimited supply. Supply has actually been low. Therefore your assumption is wrong and your conclusion is invalid.

tatupu70 says

Nope-it actually doesn't. You assume that sales = demand.

When I spoke at the UCLA Anderson Conference in 2013, what I showed them was this fact

That in the 21st century we have never had 6 months of supply unless we had a recession and of course that lead to an excess of distress homes.
The low inventory hangover actually isn't low inventory hand over. We have more supply since 2012-2015 than we did from 1999-2005

The demand curve is light but as long as supply is under 6 months national and there is no job loss recession to add distress homes into the market place
price have legs

Logan Mohtashami says

When I spoke at the UCLA Anderson Conference in 2013, what I showed them was this fact

That in the 21st century we have never had 6 months of supply unless we had a recession and of course that lead to an excess of distress homes.

The low inventory hangover actually isn't low inventory hand over. We have more supply since 2012-2015 than we did from 1999-2005

The demand curve is light but as long as supply is under 6 months national and there is no job loss recession to add distress homes into the market place

price have legs

None of this is a response to my point. Your assumption that sales = demand is wrong.

1996 to 2007 we had great demographics for home ownership

Ages 30-44 were good

But in 2007 Prime working age peaked and we are only slowing growing back that metric

So, what I tried to show through the census data line and it will come out in an article today

You're going to lack the supply do home buyers in this cycle for 2 reasons

1. Move up buyer is held back on debt
2. Demographics for first time home buyer will be lacking

http://www.census.gov/popclock/?intcmp=home_pop Census population chart

They were skeptical of this thesis and thought home sales should move near 6 million for EHS and 750K by 2014

That didn't happen

What the supply demand curve had or the pent up demand thesis .. it was for renting

7-10 million distress home buyers losing their home = renting
huge young population which still hasn't come on line yet...

They will be renting until years 2020-2024

tatupu70 says

None of this is a response to my point. Your assumption that sales = demand is wrong.

You didn't read the statement correctly , supply is more important for prices, especially when supply is conventional sales to distress

This is main reason why I don't believe we are going to get a housing crash in the next cycle in terms of prices because we won't have a massive amount of distress homes
coming on line when the next recession hits.

Net demand curve extra in this cycle was cash buyers, even if they all unloaded at the same time, they wouldn't be distress auction sales

Supply under 6 months, distress to conventional sales are the key for price and that is why all my price predictions were positive even with the weal demand curve in housing

Here is the one thing that economist and professors care about

All they care about is new home sales because of the multiplier impact on the economy, the higher value home prices and spending for us, wasn't going to be a big deal in this cycle because of the less extraction from cash out.

This is where Professor Sufi from University Of Chicago and I talked about at the economic conferences in 2013 and 2014

They just care about housing starts because of the economic impact

Here is a clip of the conference

https://www.youtube.com/embed/ns4bxXfqOow

Logan Mohtashami says

You didn't read the statement correctly , supply is more important for prices, especially when supply is conventional sales to distress

This is main reason why I don't believe we are going to get a housing crash in the next cycle in terms of prices because we won't have a massive amount of distress homes

coming on line when the next recession hits.

Net demand curve extra in this cycle was cash buyers, even if they all unloaded at the same time, they wouldn't be distress auction sales

Supply under 6 months, distress to conventional sales are the key for price and that is why all my price predictions were positive even with the weal demand curve in housing

Actually, I read it and understood it. You don't understand my point. You use sales numbers as a proxy for demand. I'm telling you that's not correct. Try to stay focused on this point.

Logan Mohtashami says

You didn't read the statement correctly , supply is more important for prices, especially when supply is conventional sales to distress

That's the whole point. Thousands of words on demand, when anyone know it's a supply issue. You can't buy what's not for sale.

It's like someone buying a car and you talk about the extended warranty - completely useless information. when people talk about housing market, the default context is price movement. No one gives a crap about sales volume. Sales volume is a function of supplies. How do owners get bitched slapped when renters are puking?

tatupu70 says

Actually, I read it and understood it. You don't understand my point. You use sales numbers as a proxy for demand. I'm telling you that's not correct. Try to stay focused on this point.

SFace says

That's the whole point. Thousands of words on demand, when anyone know it's a supply issue. You can't buy what's not for sale.

It's like someone buying a car and you talk about the extended warranty - completely useless information. when people talk about housing market, the default context is price movement.

I gave a you a model for prices to work even with a demand curve being weak and you still try to fight against it, even though in theory you agree with it, and then in theory you agree with the demand curve being weak from main street but strong from the Rich.

You're just having a debate for the sake of having a debate, because you just agreed with the core thesis of supply and demand economics with housing in terms of price gains.

Logan Mohtashami says

I gave a you a model for prices to work even with a demand curve being weak and you still try to fight against it, even though in theory you agree with it, and then in theory you agree with the demand curve being weak from main street but strong from the Rich.

You're just having a debate for the sake of having a debate, because you just agreed with the core thesis of supply and demand economics with housing in terms of price gains.

Are you kidding me. I'm not fighting that model. I'm simply pointing out that your assumption that sales = demand is wrong. Try to stay on topic for a second. Do you understand that point?

tatupu70 says

Are you kidding me. I'm not fighting that model. I'm simply pointing out that your assumption that sales = demand is wrong. Try to stay on topic for a second. Do you understand that point?

You're right, I mean how can we say Demand is weak in this cycle, seriously, demand is so strong, it's crazy

Adjusting to population are the lowest on record post WWII and it's at the lowest rate curve post WWII

I must be silly, you're correct, sales don't equal demand

Logan Mohtashami says

You're right, I mean how can we say Demand is weak in this cycle, seriously, demand is so strong, it's crazy

lol--so you're arguing my point that you can't use sales as a proxy for demand because supply is constrained, by showing me graphs of sales volumes. You can't make this stuff up.

tatupu70 says

lol--so you're arguing my point that you can't use sales as a proxy for demand because supply is constrained, by showing me graphs of sales volumes. You can't make this stuff up.

Not at all, I am saying that your thesis that sales don't equal demand is fascinating. It's a interesting thesis that the final sale of a items doesn't mean their is demand for that item.

If that item adjusting to population is at the lowest level every recorded when the cost of debt is at it's lowest level ever recorded post WWII that for some reasons that doesn't mean their is a demand problem

I have heard some wild economic theory on the internet but sales not being used as a proxy for demand is the first

“Weak home sales are ‘much more of an income problem than a credit problem,’ said David Blitzer of S&P Dow Jones Indices. #housing #NAR”

‘I don’t think there is a housing shortage…It’s strictly a matter of low demand, said’ “NAHB Chief Economist Crowe: #housing #NAR @NAHBhome”

I am trying to think do I know one person in the world that doesn't believe the sales demand curve from main street is weak.

Right now, I can actually believe, you really do think sales isn't a proxy for demand. I actually believe you when you say that

Logan Mohtashami says

Not at all, I am saying that your thesis that sales don't equal demand is fascinating. It's a interesting thesis that the final sale of a items doesn't mean their is demand for that item.

Logan Mohtashami says

have heard some wild economic theory on the internet put sales not being used as a proxy for demand is the first

Logan--as I've pointed out many times. Sales only works as a proxy for demand if there is significant excess supply. Do you think there is significant excess supply right now? I don't think you have a good grasp as to what the numbers you post really mean. It's unfortunate. You're almost like a robot--you are good at creating graphs, but you can't get a deep understanding of what they mean.

Logan Mohtashami says

‘I don’t think there is a housing shortage…It’s strictly a matter of low demand, said’ “NAHB Chief Economist Crowe: #housing #NAR @NAHBhome”

If this were the case, prices wouldn't be rising like they have been for the last few years.

Logan Mohtashami says

Right now, I can actually believe, you really do think sales isn't a proxy for demand. I actually believe you when you say that

It can be, under the right conditions. You just need to understand what those conditions are....

tatupu70 says

but you can't get a deep understanding of what they mean.

Under that economic thesis you would be implying that rental demand isn't strong either even though vacancies are at a cycle low

Because household formation being on the rental side doesn't mean rental is strong, because the sale of a rental contract doesn't = demand

What you're saying that there is no demand curve in housing, because sales don't equal demand, that the renting boom doesn't equal a renting boom either

I have never met any person who sales sales don't equal demand, for that my lady, thank you

tatupu70 says

It can be, under the right conditions. You just need to understand what those conditions are....

Under the housing bubble years because inventory never got past 5 months, that would mean you believe the demand curve was real then or not real

We have more inventory today nationally than we did in 1999-2005 but the demand from main street is much less for both new and existing homes

So demand even during the housing bubble years didn't mean sales = demand correct

This is great stuff,

So the second question, I get the most is why are car sales doing great but home sales aren't

In fact nobody has ever showed me metrics showing me home sales are great. They ask Logan, those car sales are smoking why not homes

Here is a question, does the sale of a car not equal demand either

DTI +LTI factor model for this that explains why car sales are booming and housing isn't

Again, sales don't equal demand
So are car sales doing bad in this cycle

tatupu70 says

Logan Mohtashami says

‘I don’t think there is a housing shortage…It’s strictly a matter of low demand, said’ “NAHB Chief Economist Crowe: #housing #NAR @NAHBhome”

If this were the case, prices wouldn't be rising like they have been for the last few years.

If we have not built enough homes in the last 8 years to accommodate 25 million more people, we must have a home shortage.
When we don't provide enough mortgage loans to deserving home buyers, we start cutting back on demand.
Demand still exceeded supply, which is why home prices have been going up. Those unlucky not to buy their own homes have been forced into the limited rental market, driving up rents there.
It's not complicated, and it's not changing any time soon. Expect more of the same in the next few years.

Strategist says

Strategist  

You have more inventory from 2012-2015 than 1999-2005 as avg annual months and you're missing 1.5 million mortgage buyers on avg. for 6 years and this is with 2% lower interest rates and if it wasn't for the 20% above trend cash buyers the total net sales of home would be roughly slightly higher today than the low in the great recession.

To say there is no demand curve problem for housing when rental demand has boomed is just ignoring the data, plain and simple. I don't expect this to change until years 2020-2024 when you get real demand for housing which means the double supply of first time home buyers and move up buyers together

Logan Mohtashami says

Strategist says

Strategist  

You have more inventory from 2012-2015 than 1999-2005 as avg annual months and you're missing 1.5 million mortgage buyers on avg. for 6 years and this is with 2% lower interest rates and if it wasn't for the 20% above trend cash buyers the total net sales of home would be roughly slightly higher today than the low in the great recession.

To say there is no demand curve problem for housing when rental demand has boomed is just ignoring the data, plain and simple. I don't expect this to change until years 2020-2024 when you get real demand for housing which means the double supply of first time home buyers and move up buyers together

OK, what you are saying is.......There is plenty of supply, as can be seen from the Months of inventory chart. The real issue is the lack of demand as can be seen from the mortgage purchase applications, inspite of lower rates.
1. You know home sales/transactions can go up 10 fold, or go down to a tenth, and the months supply does not have to change an inch. In my view the months of inventory is a snapshot in time that reflects the demand and supply at any given time. Being below the norm is simply an indication of prices more likely to firm.
2. The mortgage purchase applications in the face of lower rates indicates tight lending, with lenders refraining from promoting their products. No lender wants to bother taking applications from those unlikely to qualify.

Strategist says

OK, what you are saying is.......There is plenty of supply, as can be seen from the Months of inventory chart. The real issue is the lack of demand as can be seen from the mortgage purchase applications, inspite of lower rates.

Logan Mohtashami says

LOL. OK, but you are missing my point.
I think Tatupu does have a point.....you are using the wrong charts for the wrong reasons, resulting in wrong conclusions.
What about:
affordability index
unemployment rates
interest rates
new home construction
demographics
My 2 cents: If you use the above, you will see homes are affordable in most regions. Lack of new home construction is a ticking time bomb. Lending is too tight. If things don't change very quickly we are in for a reverse of 2008 in terms of home prices.

Demographics economics matter for the demand curve in housing, this is the main thing I talk about with economist.

Supply of buyers, Only 2 groups outside of cash buyers which have been very strong in this cycle

Move up and first time home buyers.

You never had the goods in the first place to have a strong demand curve housing.

Here I explain it here, you will understand what I mean about demand curve economics better

http://loganmohtashami.com/2015/09/24/why-mortgage-purchase-applications-are-near-an-all-time-low-when-adjusted-to-population/

What I tell bullish housing people is this

Adjusting to population new home sales have had only on other time post 1963 where sales were this low and that was in the early 1980's when rates were over 14%

That is how bad the demand curve is, I understand why people thought sales would be booming, if you used old economic model in this cycle, you were toast in terms of home sales from the start.

Logan Mohtashami says

What I tell bullish housing people is this

Adjusting to population new home sales have had only on other time post 1963 where sales were this low and that was in the early 1980's when rates were over 14%

That is how bad the demand curve is, I understand why people thought sales would be booming, if you used old economic model in this cycle, you were toast in terms of home sales from the start.

Based on this reasoning, home prices should have crashed further in 2011-2014. So why did they jump?