patrick.net

HEY YOU says

APOCALYPSEFUCKisShostikovitch says

To put it all in cinematic terms, we're halfway between Les Mis and The Purge and well on the way to The Road.

Long yams!

Do long yams taste better than short yams?

Only with "long pig."

Logan Mohtashami says

If that is the case going into 2015, they need to find a solution to draw more people into that market

IMO, builders are wiped out by used home sellers. Their cost is simply too high to offer a competitive pricing against a used home.

You can only extend prices for so long.

I actually have a one on one meeting with Ivy Zelman soon, she has been the biggest housing bull in America, that will be a good conversation

Logan Mohtashami says

You can only extend prices for so long.

You don't have to do any analysis. You just have to observe your clients - what do they think when they take out a loan on the pricey wooden box. There can't be a bull market forever and there can't be a bear market forever. Looking at last 10 years prices have run up too fast. Post 2008 correction was just the correction for the bad loans. Now is the time for slow correction to flat prices for years to come, assuming there is no recession. One recession will pull back the prices to last bottom prices.

New homes historically have been 1/6th of the market
Been 1/10th - 1/12th of the market place

However, as small of sales it is compared to EHS. It has a much stronger economic component factor to it due to it's multiplier impact

Once all the minimum wage,part time workers save a few hundred bucks there will not be any unsold homes on the market. I'm surprised that all the middle class that are doing sooo well haven't bought all the for sales.
With the economy doing so well I can't believe that manufactures & suppliers can keep even one item on store shelves due to the rush of consumers.

Still, if we can't get at least 8% sales growth in the new home sales market, then even I was too bullish on demand for new homes.

Month to Month numbers have had a wild range but the trend numbers have been soft this year

The economy is fine in spite of housing construction.

"KISS" principles (Keep in Simple Stupid)

When new home construction are below normal for a long period of time, it is bullish for home price. less new homes means less supply long term available more people. It's that simple.

and there is nothing wrong with builders, their margins are higher than ever. They just make more money with less, pretty brilliant.

KBH gross margin went from 6% to 11% to 14% to 17% in 2010-2103. It's not isolated, Pulti margin went from 11% - 20% last Q was 23.6%
2014 is annulizing at 19% YTD. Why build more homes when you can focus making more on each one. I love home buidlers cautious approach to not hit and run like it was in 2003-2008.

SFace says

The economy is fine in spite of housing construction.

I was wrong about economic growth this year. I had GDP at 2.4% total growth for 2014

At best we are going to grow at 1.975% total growth

With the 10 year well under 3% the entire year

ZIRP the entire year

So, I was too bullish on economic growth and we are going to have a 1 handle on economic growth for 2014

-2.1% GDP Q1
4.3% GDP Q2 ( post revision) 40% inventory factor for Q2
3.1% GDP Q3 ( Estimate trend)
2.6% GDP Q4 ( Estimate trend)

1.975% total growth for GDP 2014

Jobs numbers are doing much better

229K avg but the higher wage to lower ratio is the best have seen in this cycle. Now this is a bullish factor that doesn't get much play these days. The higher wage job #

Logan Mohtashami says

SFace says

The economy is fine in spite of housing construction.

I was wrong about economic growth this year. I had GDP at 2.4% total growth for 2014

At best we are going to grow at 1.975% total growth

With the 10 year well under 3% the entire year

ZIRP the entire year

So, I was too bullish on economic growth and we are going to have a 1 handle on economic growth for 2014

-2.1% GDP Q1
4.3% GDP Q2 ( post revision) 40% inventory factor for Q2
3.1% GDP Q3 ( Estimate trend)
2.6% GDP Q4 ( Estimate trend)

1.975% total growth for GDP 2014

Jobs numbers are doing much better

229K avg but the higher wage to lower ratio is the best have seen in this cycle. Now this is a bullish factor that doesn't get much play these days. The higher wage job #

Why are we getting less than 2% economic growth?

Analyzer says

Why are we getting less than 2% economic growth?

horrible Q1 print on GDP, very hard to make up that number.

Indiana Jones says

Logan, how much influence do you think the int'l buyers and 1%ers will have on the housing market in the near term and long term?

The cash buyers have been 30% plus for a few years now. Historically they have been 10% of the market place.

When you look at this cycle, even when rates and price deflation was at it's lowest combo point in 2012 when rates got down to 3.25% You still had 30% plus cash buyers

The model really has to do with how many mortgage buyers you will see.

In 2014 cash volumes are lower but the % of buyers is slightly higher due to lack of sales.

So, following trend it looks like volumes are going to be lower but if the mortgage buyer doesn't step up then the % could be higher than historical norms for a long time.

I know here in Irvine 80% of the net new buyers are Chinese in the past 2 years

I am a Keep it simple stupid (KISS) economist.

If you want gray hair, do it the Logan way,

If you want to just get the bottom line answer, all I need to do is look at consumer confidence. It is 100 factors all wrapped up in one little package and all you need to know about where the economy is. yes, that simple.

SFace says

l I need to do is look at consumer confidence

I do have some grey because I got married 3 years ago

Logan Mohtashami says

I was wrong about economic growth this year. I had GDP at 2.4% total growth for 2014

At best we are going to grow at 1.975% total growth

I love how you go from 2.4% to 1.975% at best. No, it's not 1.9% or 2.0%, it's 1.975%. Your prediction was off by about 20%, but now you're predicting the GDP growth to the thousand decimal digit. How lovely.

E-man says

but now you're predicting the GDP growth to the thousand decimal digit. How lovely.

Take a calculator

add 4.3 + 3.1 + 2.6 - -2.1 divide by 4 and tell me what you get

SFace said: That's a permanent change as basegame stadium don't need that segment anymore. The clippers was sold for 2b bucks which was what a 10,000% return in 30 years.
Let's be careful about what is "permanent" and "normal". Cable/satellite providers in LA decided they don't need "that segment" anymore and many fans have been experiencing a Dodgers blackout on their subscription networks.

Logan Mohtashami says

E-man says

but now you're predicting the GDP growth to the thousand decimal digit. How lovely.

Take a calculator

add 4.3 + 3.1 + 2.6 - -2.1 divide by 4 and tell me what you get

Wow, that's your response? Anyone with 1/2 a brain would say about 2%. After all, it's all a guess work. No one with 1/2 a brain would say I guess it's 1.975%.

E-man says

Logan Mohtashami says

E-man says

but now you're predicting the GDP growth to the thousand decimal digit. How lovely.

Take a calculator

add 4.3 + 3.1 + 2.6 - -2.1 divide by 4 and tell me what you get

No one with 1/2 a brain would say I guess it's 1.975%.

Most of the engineers I work with would...........

E-man says

Anyone with 1/2 a brain would say about 2%

Then please categorize me with someone that has a half a brain, I truly and proudly belong in that group. In my half a brain world it will always be 1.975% never 2% :-)

GDP = C + I + G + (X-M)

May 7, 2013 exactly what I warned once the 2nd hand of housing inflation comes due to weak internals #DTI #LTI

ut/ …

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

Logan Mohtashami says

I actually have a one on one meeting with Ivy Zelman soon, she has been the biggest housing bull in America, that will be a good conversation

Isn't being a housing bull pretty straight-forward? "We got people to pay bigger and bigger percentages of their income to their house. Why would they stop? If people in the Bay Area will pay 50% of their income on houses why not the rest of the country?"

Logan Mohtashami says

Then please categorize me with someone that has a half a brain, I truly and
proudly belong in that group. In my half a brain world it will always be 1.975%
never 2% :-)

GDP = C + I + G + (X-M)

I think you need a refresher on significant figures then.

tatupu70 says

I think you need a refresher on significant figures then.

FunTime says

Why would they stop? If people in the Bay Area will pay 50% of their income on houses why not the rest of the country?"

"San Francisco is experiencing its biggest housing crisis probably since World War II," says longtime housing advocate and Airbnb critic Calvin Welch. "There is a phenomenon of an extraordinary increase in the cost of housing."

Comparing San Francisco to the rest of the nation isn't a good apple to apple comparison due to the economic factors there compared to the rest of the nation. So the affordability crisis they have there is for the poor compared to the wealthy who have the $$$ to buy there. A lot Hot Tech and Finance money as well as foreign money as well.

The rent problem is very big there and why City Hall is trying do to what it can to slow down the pain

Logan Mohtashami says

Yep--that's my point.

tatupu70 says

Yep--that's my point.

That is 2nd revision Q2 GDP print which I estimated at 4.3% so I was off

Q1 -2.1
Q2 +4.3%
Q3 + 3.1%
Q4 +2.6%

That's how I get 1.975% total year GDP growth
So it wasn't reflecting a Q2 GDP print but a total for the entire year

Logan Mohtashami says

That is 2nd revision Q2 GDP print which I estimated at 4.3% so I was off

Q1 -2.1

Q2 +4.3%

Q3 + 3.1%

Q4 +2.6%

That's how I get 1.975% total year GDP growth

So it wasn't reflecting a Q2 GDP print but a total for the entire year

I'm not saying you got the wrong answer, just that you are using too many decimal points.

tatupu70 says

I'm not saying you got the wrong answer, just that you are using too many decimal points.

If I round it off it's 2%

I have to use the actual mathematical breakdown, I hear with what you're saying, I just can't say 2%. Just wired that way .
Here is a more of breakdown it came in a 4.17%