patrick.net

Logan Mohtashami says

Gob bless you for making my point :-)

God does not bless atheists. :(

Logan Mohtashami says

Thank you, Thank you, Thank you!

For what? You said this and that, and that and this, but you still have not given me a valid explanation as to why sales and prices are surging when homes are not affordable.

Call it Crazy says

March existing-home sales in the Northeast increased 6.9 percent to an annual rate of 620,000, and are 1.6 percent above a year ago. The median price in the Northeast was $240,500, which is 1.6 percent below a year ago.

Same question. Why are sales surging if homes are not affordable? They should be going down.

Logan Mohtashami says

OK, good chart. That blue line will always be below the red line as long as population is increasing. It still does not answer the million dollar question.
If homes are unaffordable, why did sales and prices go up so much since 2012 when they should be declining? Why are they surging again instead of going down?

By the end of 2015, I am gonna turn you guys into raging bulls. Just wait and see. :)

Call it Crazy says

I wouldn't call a 1.6 percent increase in the N.E. from last year a "surge", considering prices are going down...

How much has the lower interest rates the last year contributed to the "surge"?

Did you notice how much it snowed in the NE? Guess how much it snowed in over priced, over taxed, over burdened, waterless, smoggy California?
I want my shovel back. :)

Strategist says

why sales and prices are surging when homes are not affordable.

December 22, 2014

"What went wrong? Forgive me for repeating myself (for the past four years, I’ve been singing this same tired song) but my number one thesis for why the housing market is not living up the tearfully whispered fantasies of real estates agents, economists, housing analysts and other experts is that we simply don’t have enough qualified home buyers to have a true housing recovery in America."

"You get my drift: The bar for housing is so low that some housing bulls might try the predictable tactic of bellowing about exponential growth portending a miraculous recovery when all that is occurring is a bump up from a pitifully low base. I take a more measured (or perhaps jaundiced) view of what the future holds."

http://loganmohtashami.com/2014/12/22/2015-housing-predictions-the-bar-is-so-low-we-might-trip-on-it/

Not only do I reject the thesis of sales surging I know whatever was left of the housing bull community would use the low bar metrics gains to promote a thesis that even the housing heads at a conference refute

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

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

If there was a national housing conference where the heads of the asylum can explain why home sales are so weak and they did, why if cash buyers weren't around home sales would be at the Great Recession Lows, if this doesn't convince you there is an issue, then a Economic Arkham Asylum needs to be created

:-)

Wages are inflating. I would estimate 15-20%. I have seen correlation with both QE2 and QE3 in revenues with both of my business's. It's just a matter of time before we see higher inflation and the fed having to pump the brakes. Although I would hope its a slow rate hike.

Once again Logan says the housing market isn't doing much, the duck says that's not true look at the bay area, and CIC says the duck is wrong look at NJ. It's like the blind men with the elephant.

So let me get this right. We've had 15 years of population growth, the mortgage interest rate is half what it was 15 years ago, the price of houses in most places, other than CA, is about what it was 15 years ago, and house sales are still less than 15 years ago. That's not very impressive, no matter what happens in the bay area.

Note to duck. Saying housing isn't doing much is not the same thing as saying housing is crashing no matter how much you want to spin it.

One thing we all have to realize now with housing is that it's back to it's normal cycle relationship with the economy

Unless you get a job loss recession the ability for distress homes to come to the market is very low, even traditional supply is held up due to the hangover impact of the housing bubble

I spent some time trying to explain to the economist at realtor.com because frankly they're all scratching their head on why home sales have been so soft. The first thing they always blamed was tight lending. So, it's such a good thing that 2 days ago at the NAR conference professor Sanders from George Manson and I who have been spear heading this thesis... finally, it's come to a realization that Housing cycles need incomes if they're going to meet their growth metrics. Millions of homes are going to be bought a year.

The low point for EHS in the Great Recession was 4.1 million homes, last year in year 6 of the cycle with 4% rates it got to 4.93 million these are so low to compared estimates.

I was looking for 5.0 - 5.2 million total sales which roughly lets say 3% growth from last year

1. For existing home sales – I predict we will see somewhere in the area of 5.0 million -5.20 total number of homes sold in 2015, with these caveats; cash buyers continue to make up to 30% of the market, and, buyers continue to migrate away from the purchase of new homes in favor of existing homes due to their better value for money and their dispersed geographical distribution. If cash buyers back out of the housing market, and new homes are able to attract the upper income buyers then there is a risk that we will once again experience negative existing home sales, year over year compared to the 5.10 million homes sold in 2013. My prediction, however, is that cash buyers will remain in the market, soaking up the increased inventory and new home sales will remain weak because builders will refuse to lower their prices to meet the current economic realities. This is an increase from the number of existing home sales in 2014 but like last year, we will need the wealthy and the cash buyers to continue to buy a big portion of the homes.

New home sales looking for 8%-12% growth but if mid level buyers come in you can see dramatic growth from last 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. Other “expert soothsays” are predicting an over 25% increase in new homes sales in 2015, because demographics show a buildup in the need for homes. However, the Median Income to Median Home Prices (MI2MP) metric shows that new homes are more expensive than ever and therefore only an option for the wealthy buyer. 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 – and this would mean lower margins – a trade-off I don’t believe the builders are willing to make. Our experts made some epic misses in their prediction for new home sales, starts and permits in 2014. Hopefully their horrible performance provided a much-needed wake up call that debt to income capacity matters in an economic sector that is 90% dependent on mortgages.
For the multi-family new construction market, I predict rental demand will remain strong so starts, sales, permits and multi-family construction will rise but not as fast as many think.

The only reasons I have growth metrics in housing is that it's so low in sales going into year 7 of the economic cycle with 3.75% rates and adjusting to population there isn't much going on here

The question is why? for people like me who have been doing this for over 15 years it's very simple why...

and I never deviated from this thesis for years

10:35

https://www.youtube.com/embed/o9O_FDLPdgA&t=10m35s

On another note, there was a discussion on Boomerang Buyers last week, FHA said they only gave out 2,162 loans last year to Boomerang Buyers, they're slowly coming back but look for this group to come back from Chapter 13 and short sale group not Chapter 7 or foreclosures.... some for sure will come back but they run into problems that I see with people with no credit ding and a job

"

Housing analyst and loan manager Logan Mohtashami believes the numbers are far lower, citing Federal Housing Administration data showing only about 2,000 buyers with foreclosures on their records used FHA loans last year. Consumers can get FHA mortgages in some circumstances only three years after a bankruptcy.
“The market (for boomerang buyers) just isn’t as good as they think it will be,” he said. “Forget about the timeline (for clearing their credit reports). People in this group have to re-establish credit, and they have to have a down payment, which Americans with good credit and three jobs have trouble with.”

http://blog.credit.com/2015/04/boomerang-buyers-is-there-homeownership-after-foreclosure-114803/

What are you going to do with all the extra time now that you have finally gotten your point across?

indigenous says

What are you going to do with all the extra time now that you have finally gotten your point across?

Do what I always, make the dream of home-ownership come true... GAG ... what a lame line that always was. On another note I might get top 40 under 40 in America for housing this June, I doubt it but 2014 was my best year ever and in the first 30 days of 2015 I surpassed 2014 levels but for my housing work on economics I might get in this year.

What I really want to do is go to congress as some of my friends have and make a statement on preventing lending standards from easing on the policy statement that we should hold people legally accountable if they ease standards and a housing bust happens to very high risk borrowers. That people should sign off on a policy on standards which I would gladly be the first person to sign but I want

Mark Zandi: is an American economist and co-founder of Moody's Economy.com, a widely cited source of economic analysis. Moody's Economy.com is part of Moody's Analytics

Laurie Goodman: is the center director of the Housing Finance Policy Center at the Urban Institute.

Jed Kolko:Economist with expertise in advanced statistical methods and analytics

I take the heads of the Tight Lending Myth Crew and the rest will follow this is why Proffesor Sanders and I were happy with the 2 conferences this with

1. Fannie Mae Affordability conference which findings have to be private

2. NAR, NAHB, S&P Housing Conference a few days ago

Don't allow the snakes to the Garden bad things will happen!

Logan Mohtashami says

What I really want to do is go to congress

Campbell recently retired.

Will you be co-opted?

A more interesting conversation would be about ZIRP.

indigenous says

What I really want to do is go to congress

Not running, I have had many conversation with Campbell financial advisers on housing, it's a dead end, politicians all want money

More as a testimony to housing affordability and why easing standards isn't the cure for this sickness

In regard to what can the FHFA, CFPB and Congress can do to address the housing inflation problem in America today

It's a damn if you do (housing price) and more damned if you don't market (rent are way up and trending up).

I remember all those on Patnet in 2009 blessed the buy/rent calculator with 1% rent increase. Looks pretty foolish to me.

The low transaction #'s is a reason to love the housing market. It is a bullish as hell indicator.

SFace says

I remember all those on Patnet in 2009 blessed the buy/rent calculator with 1% rent increase.

Actually, the built in assumptions were 0% rent appreciation and -1% price appreciation - in perpetuity...

SFace says

Looks pretty foolish to me.

Agreed. Years from now, some grad student in psychology researching cognitive dissonance and groupthink is going to stumble across this site (circa 2009), and find a treasure trove of information. Its a built in thesis paper just waiting to be discovered.

This is one of those things I have a great feel for in a market in which I'm an active participant. I can conveying my understanding of market conditions in Northern California and I believe they can be applied to a lesser extent to the entire country.

---------------

I wouldn't argue with your cali predictions, but i think your a looney tune thinking you can apply that to the rest of the country. Apples to Apples, maybe it holds anywhere else where the job market is scorching hot and the housing stock is constricted, but most rest the country is wide open, and doesn't remotely resemble the SF Bay scenario

Id agree with that. Well, gAins that track inflation, most importantly wage inflation

I'm interested to see what happens with interest rates wrt mortgages. They've been trending down for my entire lifetime, and theres not much room left for them to fall. Id guess that in order for house prices to continue to inflate, were going to need higher wages AND lower rates, both of which are possible, and maybe even likely.

errc says

They've been trending down for my entire lifetime,

rates can stay low for a very long time

We have had 2 cycles since the year 1900 lasting 37 and 42 year where rates were Low

errc says

Apples to Apples, maybe it holds anywhere else where the job market is scorching hot and the housing stock is constricted, but most rest the country is wide open, and doesn't remotely resemble the SF Bay scenario

The "rest of the country" really isn't wide open any more than SF Bay area is. At least the places where the majority of the population wants to and does live. New construction is further and further away and less and less desirable.

Logan Mohtashami says

This is falling and this is very good thing, first time this cycle cash buyers are less than 30% of the market and down now 7% for the year as a % of the market place. I see this as a positive for housing now

Where are we in the cycle? It gets obfuscated with the Fed's muddy hand.

bob2356 says

The question, you manage to ignore questions as much as indigenous

Good Gawd you must eat hubris 3 meals a day. Going back to your last foray, in which you had the imbecilic idea that you were the only one capable of understanding the word "nominal" regarding the ridiculous CBO estimates on medicare. To which your answer was, once again was:

https://www.youtube.com/embed/K8E_zMLCRNg

indigenous says

Where are we in the cycle? It gets obfuscated with the Fed's muddy hand.

7 year in the cycle is long, but no Fed Rate hikes, so the reversal doesn't start until they start hiking

Logan Mohtashami says

indigenous says

Where are we in the cycle? It gets obfuscated with the Fed's muddy hand.

7 year in the cycle is long, but no Fed Rate hikes, so the reversal doesn't start until they start hiking

What makes them hike?

indigenous says

What makes them hike?

Unless they change their language, 2 % PCE
This isn't just #ZIRP this is Emergency rate policy for a long time,

But the Fed is always 6 months away from that first rate hike in this cycle

Logan Mohtashami says

indigenous says

What makes them hike?

Unless they change their language, 2 % PCE

This isn't just #ZIRP this is Emergency rate policy for a long time,

Which means the stock market isn't changing anytime soon either

Call it Crazy says

Bob called you out on your lying and bullshi

No, I said I didn't think his experiences in the bay area translated to the entire country. At least based on my on the ground observations around the country for the last year. I notice he didn't document all the bidding wars outside the bay area the last 6 years that were locking "ordinary" buyers out of the market.

sbh says

I'm watching NBA basketball and listening to you, an idiot racist cunt eat his shit. When the game is over I'll go to sleep and you'll keep eating your shit long into the night.

There's another addition for your web site: www.DegenerateFictionWriter.com.... You're doing great with your fictional content, keep going!!

Wow, you're really on a roll this week, making up for lost time when you were in rehab!!sbh says

Look in the mirror and shoot yourself.

There's another addition for your web site: www.DegenerateFictionWriter.com.... You're doing great with your fictional content, keep going!!

Wow, you're really on a roll this week, making up for lost time when you were in rehab!!

sbh says

Someone should be jealous of you because you're a lying sack of shit?

There's another addition for your web site: www.DegenerateFictionWriter.com.... You're doing great with your fictional content, keep going!!

Wow, you're really on a roll this week, making up for lost time when you were in rehab!!

indigenous says

bob2356 says

The question, you manage to ignore questions as much as indigenous

Good Gawd you must eat hubris 3 meals a day. Going back to your last foray, in which you had the imbecilic idea that you were the only one capable of understanding the word "nominal" regarding the ridiculous CBO estimates on medicare. To which your answer was, once again was:

I didn't say I was the only one capable of understanding it, everyone except you and CIC understands just fine. I carefully explained what it meant and why it mattered 3 times. Would a 4th really have done the trick? I doubt it.

bob2356 says

I didn't say I was the only one capable of understanding it, everyone except you and CIC understands just fine. I carefully explained what it meant and why it mattered 3 times. Would a 4th really have done the trick? I doubt it.

And everyone but you looks at the obvious that the CBO numbers are a joke and used by politicians to sell their bill. Instead you jump over the obvious to focus on the trivial to some how make your target look silly, which is fine except you miss the main point. This problem is peculiar to YOU.

Recapping the original point, the housing weakness in this cycle are due for a host a reasons ( Demographics, Lack of exotic liar loans, Economic cycle and wage inflation with soft recovered base salaries)

but the main aspect for sale demand weakness from main street is always about income & assets and not tight lending, especially to W2, paystub wage earners

On a total different subject

How about DNKN from the last time we talked about the thesis of stock

Logan Mohtashami says

How about DNKN from the last time we talked about the thesis of stock

Nice, do you subscribe to donuts as the new reserve currency commodity? Or was there another reason for your sucess?

Logan Mohtashami says

On a total different subject

How about DNKN from the last time we talked about the thesis of stock

Nice Call.

indigenous says

Or was there another reason for your sucess?

On April 8th, the brand new D.D. was opened here in the O.C.
The demand was insane and still is. Obviously low supply of chains here in the west coast
So, with expansion capacity once I read more on the company and tested their items it looked like there could be a longer term thesis.

and I did test most of their items, it's not my kind of thing, but I could see why it's popular.

Wait time on the weekend in car line was 27 mins avg

Good call. By that reasoning In and Out would be a good buy as well except they are not publicly traded. It does make me wonder if there will be a change in the fast food market place that someone will exploit (in a good way)