patrick.net

The internal data isn't good, that was what was wrong with EHS for years
http://loganmohtashami.com/2014/03/20/existing-home-sales-look-soft/

toothfairy says

Looks on track to me.

The chart does show higher highs and higher lows after 2008. A choppy start to an all out panic buying just round the corner.
You ain't seen nuttin yet.

Call it Crazy says

Strategist says

A choppy start to an all out panic buying just round the corner.

You ain't seen nuttin yet.

It's Sunday... Did you start drinking early today???

Wife wont let me have more then 2 glasses of wine with dinner, because Dr. Oz says 2 is good for you. The jerk could have said 3.

Strategist says

Wife wont let me have more then 2 glasses of wine with dinner, because Dr. Oz says 2 is good for you. The jerk could have said 3

Dr. Oz and your wife are both right! no more than 2 per day, no more than 14 per week, at least one day with none. A glass of wine is 5 ounces.

How old are you? As we get older that number goes to 1 :-)

I am glad to hear she is taking good care of you!

Logan Mohtashami says

The internal data isn't good, that was what was wrong with EHS for years

http://loganmohtashami.com/2014/03/20/existing-home-sales-look-soft/

You did that thing again where you answer my question by massaging the data and messing with the time scales...

why can't you respond to this?
https://research.stlouisfed.org/fred2/series/EXHOSLUSM495N

toothfairy says

why can't you respond to this?

https://research.stlouisfed.org/fred2/series/EXHOSLUSM495N

To me this has always been the most frustrating aspect of explaining real housing demand over the years.

Housing has one factor base to it, its shelter, so no matter what the cycle is millions of homes are going to be bought a year for a country that has 317 million people.

However, reading the internal data gives a real picture to demand

Mind that there is No throne to sit on for the bulls of 2014. There is No 5.5-5.7 million sales that were projected coming, there are no increasing in mortgage coming. All that is left in terms of % growth are the cash buyers and they are falling in volumes. Even with all this here people just can get it, it amazes even when all the mega housing bulls are throwing the towel, there is some kind of belief that buyers are going to come out of woodworks and not get first level traffic notice. It's called economic narcism and at the of the year

2014 will have negative Negative ;-) year over year sales, there is no where else to hide from this fact.

However, since it's May and exactly 1 year from this spot is when the begging happened for the turn in the housing market for existing home sales as purchase applications started to fall and SAARS peaked out in July at 5.38 million creating a 5.09 million year which can't be replaced

let me show my examples on why the economic narcissism was too high for housing

May 7, 2013 ( When everyone thought housing had recovered and we were in growth mode) Ivy Zelman direct words was We are in :Nirvana" for housing

My warning that it's not inventory but when housing inflation rising on both fronts ( Rates and Prices) that demand will get impacted. The fact is that is what happened

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

The the silly notion of sideline home buyers coming to the market when rates spiked, that horrible thesis was finally destroyed RIP

http://loganmohtashami.com/2013/07/18/housings-sideline-buyer-the-new-bigfoot/

Now this is where all the experts missed it. Once rates spiked demand was impacted and the market place was telling us this but all the economic narcissism was still in play as the housing bulls made their excuses on what happened and expected things to return back to growth mode. However, here were the main reasons why mortgage purchases applications were falling

http://loganmohtashami.com/2013/10/24/mortgage-purchase-applications-falling-slope/

Come 2014! Bloomberg Financial asked me to do the 2014 Housing predictions.
Mind that I say because mortgage demand was so weak that if the 30% cash buyer didn't stay ( In terms of volume) sales will go down. Now they are still over 30% of the market but total volume isn't as strong especially in the wild wild west.

Interview with Bloomberg Financial on 2014 Housing Predictions

http://loganmohtashami.com/2014/01/01/my-interview-with-bloomberg-financial-on-my-2014-housing-predictions/

Now into 2014 and even with the charts data showing weak demand the Housing BULLS still thought that Nirvana was around the corner as Ivy Zelman said Nirvana is around the corner for 2014...Goodness are &*((#) kidding me

The Mark Zandi had a crazy economic thesis that we are only lending to high fico buyers??? Excuse me, people who make good incomes and good assets tend to have high fico so they are buying. Mark Zandi and everyone in the financial media believes lending is tight in America but this is the biggest lie in America

There is no tight lending in America when all you need is
1.620 Fico
2. 3.5% down payment
3. DTI of 43% to buy a home

Direct shot at Mark Zandi

http://loganmohtashami.com/2014/01/27/mark-zandi-its-the-economy-stupid/

Still, in 2014 and the bulls were still hopeful on growth. Wrote an article saying if you don't get massive spike in Mortgage purchase applications by the of March 2014 is going to be negative year

http://loganmohtashami.com/2014/02/20/mortgage-purchase-applications-running-out-of-time/

(Guess what) we didn't get it to show YOY growth
-down 18.4% YOY
-down 18% on the 4 week moving average

Still the bulls thought spring will show growth.

So where are the first time home buyers???

I worked with Bloomberg Financial stating the reasons why first time home buyers were so soft. Also, quoted by CNBC Diana Olick when I told her this was the worst first time home buyer activity I have ever seen.

http://loganmohtashami.com/2014/03/05/first-time-home-buyer-whats-that/

Even with all this data.. The Housing Bulls were still convinced that growth was here. However, existing home sales started to look soft and my charts to show why

http://loganmohtashami.com/2014/03/20/existing-home-sales-look-soft/

So, Finally.... The Biggest Housing Bull in America cries Uncle.
Ivy Zelman cuts here EHS so bad that it shows

0 Growth

Let me repeat 0 growth from 2013 levels until 2016

The lady who said we are in Nirvana in Housing has cut her forecast so bad, that no growth for years. HMMMMMM

Charts again on my article show why

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

So what happened, why did they all get it wrong?

Simple 5 main points why financial media and housing pundits got it wrong

1. None of them have any financial lending experience so they naturally all assumed that lending standards would ease making demand show growth. Goodness... as I say.. they have weak econ game

2. They never ever read the internals of housing. The cycle for housing was always soft.
In a normal cycle we would see
90% mortgage buyers
40% of that first time home buyers
10% cash

This cycle

67-70% mortgage buyers
27-30% first time home buyer
30% plus cash for many years

This show a weakness not strength

3. This economic cycle had a very weak income jobs recovery profile. So, if majority of the jobs recovered have been low wage going to people 50 and over. Well, the DTI and LTI metrics for home buyers would still be high hence the very soft demand for mortgages

4. Home prices rising beyond economic reality. While some people were jumping for joy like a MTV WHAM video in the 80's ... they never thought to realize how this would impact demand. Prices were up 15%-45% in 2 years the biggest 2 year expansion we have seen outside the bubble years and the narcissism of housing bulls thought that was ok

5. New home sales and starts. Now for years I have been saying starts and sales will rise for the new home sale sector because the 80% correction it had in this cycle. However, people forgot that this is only 1/10th of sales and it's tilted for the more wealthy buyer. So, we have all this housing inflation for new homes sales and it's well over the peak of the 2006 bubble in terms of median income to median prices. So, they have been able to get away with that metric but even now that sector has been hit. We should still see growth in that sector but that is so far from main street America .

In short. The housing bulls didn't have the sophistication to know why things were soft and they didn't read the internals of housing to know that it was saying things are weak. this doesn't mean a housing collapse but growth for main street America... don't think so

bg says

Strategist says

Wife wont let me have more then 2 glasses of wine with dinner, because Dr. Oz says 2 is good for you. The jerk could have said 3

Dr. Oz and your wife are both right! no more than 2 per day, no more than 14 per week, at least one day with none. A glass of wine is 5 ounces.

How old are you? As we get older that number goes to 1 :-)

I am glad to hear she is taking good care of you!

I am almost 55. But I still feel 21.

bg says

As we get older that number goes to 1 :-)

I did not read above sentence.

Call it Crazy says

So you're saying bullish PREDICTIONS are wrong before the results are in yet.

I think you know better than that as well.

Its May, seasonality will kick in soon and by the end of March the writing was on the wall that sales were going to be negative this year because of 2 factors

1. Cash buyer % was higher but volumes were less

2. Mortgage Purchase applications have been awful this year

Logan Mohtashami says

Los Angeles Sales are down over double digits year over year that shows me that demand isn't there and one of the main reasons is because prices went up too high hence to fall in sales

I am seeing a trend reversal here in North OC. Listings are now going off market and few of them have the prices being chopped. Now, this is happening despite very low inventory level. Demand is definitely softening.

Logan Mohtashami says

How could you have red hot demand if sales are down year over year by double digits.

It takes two to tango. If the sellers aren't there, it doesn't matter how many buyers you have, sales volume will be low. I'm not sure whether that holds true in the markets you are looking at or not.

This chart seems to indicate that inventory only started growing very recently.

I can't believe that no one understands the economic benefits of increasing real estate prices.
Creation of millions of high paying jobs,creating more closings,creating more flipping, creating higher prices,creating more high paying jobs,etc. House prices will climb to the stratosphere.
Stick with this financial genius & we'll be rich.roflmao

swebb says

This chart seems to indicate that inventory only started growing very recently.

Because last year we didn't see the demand hit with lower inventory. Less homes in the market last year but buyer activity was stronger on all metrics.

Last year mortgage purchase applications were rising all the way to May. Pre activ ity traffic was good to show that we would have a positive year in sales. If anything I was too bullish on sales last years as I was looking for 5.1-5.3 million and we ended at 5.09 million

So what happened after May that created entire market to change cycle.

Mortgage rates rose 1% with price inflation already in the system which made payments for a home 30% higher in some areas.

Due to that spike the entire housing tone index started it's negative path lower.

We aren't talking about a base of 5.8 million in sales to work off. We are talking about 5.09 million with population growth of 34 million since 2000. That's not a high bar to beat.

So, with higher inventory why is it the a lot of the demand metrics falling down to negative growth.

Simple we simply don't have enough qualified home buyers and this is why Mortgage purchase applications are down over 21% year over year and cash buyers are slowly leaving the market even with a 33%-35% metric this year.

Buyers can't some come out of thin air you need to see pre activity to show buyer demand and in 2014 compared to 2013 the metrics aren't there to show growth.

A lot people had 5.5-5.7 million in total sales this year and if trend continues you're looking at 4.7 million to 4.9 million. Even I had 5.25 million but I said specially you need the 30% cash buyer ( Not just %) but in term of volumes because mortgage demand slipped off the market place once rates rose.

Most likely nation wide we should end 10-15% higher on inventory levels up 8% now but negative year over year in sales

Now it's gotten so bad that it's fallen to the new home sales market and that market is tilted for the wealthy. I still believe that sector has growth in 2014 but for those who thought 20% year over year in sales was a since, it's not looking like that metric is going to be made.

Simply the internal data on housing was always soft, because the mortgage buyers never grew with the market to off set the cash buyers so once housing inflation rose on both fronts you could see that demand was going to be hit with Americans DTI and LTI metric.

Exactly what I warned about last year on May 7th, 2013 because everyone assumed growth was here for years that 5.7 million in sales for 2014 wasn't going to be a problem

Math vs assumption theory... for demand.. Math won in 2014. This doesn't mean a housing collapse is happening, it just means we don't have growth sales and every indicator for housing went sour once rates rose at the start of May

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

Ah California. Meanwhile out here in flyover country, I am looking to close on a nice house on 5 acres, surrounded by horse farms and hobby farms, with 9/10 school district at below 300k. 15-20 min commute to my office !

Now I can have my own chickens and goats and maybe a cow or two.

lostand confused says

Ah California. Meanwhile out here in flyover country, I am looking to close on a nice house on 5 acres, surrounded by horse farms and hobby farms, with 9/10 school district at below 300k. 15-20 min commute to my office !

Now I can have my own chickens and goats and maybe a cow or two.

That sound pretty appealing. Where / how far to the nearest city?

swebb says

lostand confused says

Ah California. Meanwhile out here in flyover country, I am looking to close on a nice house on 5 acres, surrounded by horse farms and hobby farms, with 9/10 school district at below 300k. 15-20 min commute to my office !

Now I can have my own chickens and goats and maybe a cow or two.

That sound pretty appealing. Where / how far to the nearest city?

Well about 50 mi to the nearest city. But my company is out in the burbs or country. So I get to live out here. I think only CA and the NE is this crazy..

If I have to live close to the city-yeah can't afford 5 acres-but can still find decent nice houses in the 300-350k range.