patrick.net

Logan Mohtashami says

Strategist says

homebuilders. it's a no brainer.

If you want to make a cases for home builders I would use a better population data center

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

Poor Mother Earth.

Strategist says

Poor Mother Earth.

You can see how much that census data line website is

Strategist says

We have 20 million more people than we did 8 or 9 years ago

From 2000, 282 million to 320 Million

So the young are coming on line

Age 23, 24, 25 are the biggest group we have in America today. Now this group will be taking longer to buy homes is that gap supply in rental needs is trying to be met right now with the expansion on rentals.

It all falls back on the capacity to own the debt and dual income families look so much better on paper than single households

Logan Mohtashami says

Playing catch up now, the equilibrium is just off. A natural hangover from a financial housing bubble that crippled our economy

What if:

What if instead of giving loans to people in poor communities, we would have created Community Jobs Act, which would have taught a trade and taught basic business skills to those with low incomes and poor credit? Was there a better way to get people to middle class.

I remember having to forgo nice cars for ~20 years to afford a house. Now I am able to drive a luxury car - a Ford Escape.

Logan Mohtashami says

So the young are coming on line

Age 23, 24, 25 are the biggest group we have in America today. Now this group will be taking longer to buy homes is that gap supply in rental needs is trying to be met right now with the expansion on rentals.

It all falls back on the capacity to own the debt and dual income families look so much better on paper than single households

Informative chart. I think the birth rates are down though. Also don't forget immigration.

Strategist says

Informative chart. I think the birth rates are down though. Also don't forget immigration.

This is why I said use a good demographic webstie when you look at this census population data line ( forward in line forward demand)

Look at 18-28 ... that is a big portion of people needing shelter and not single family homes until they get married

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

Entitlemented says

What if instead of giving loans to people in poor communities, we would have created Community Jobs Act, which would have taught a trade and taught basic business skills to those with low incomes and poor credit? Was there a better way to get people to middle class.

States have a better shot at doing something than a Federal Program, because one politics gets involved into the equation rational thought gets thrown out

Call it Crazy says

*

My guess is that the population growth will slow, mainly because these kids in their late 20's aren't getting married and aren't starting families, as they can't even to afford to pay for themselves, much less a wife, a house and kids...

It's why I didn't have kids, it's awful I know to say, but in 1999 I did the math and I said it's 250K per child adjusting it through college and not looking to help out with shelter cost ages 25-29

That was it for me, which makes dating a lot different because I had to disclose I didn't want kids

Call it Crazy says

Oh, you chicken.... You need to suffer through parenthood like the rest of us...

Much braver men than I will be parents.

Call it Crazy says

Who's going to carry the family name in the next generation?

My younger brother will not get married for different reasons, the name dies out, all that will be left will be charts and a blog

Another article going after the tight lending myth crew

https://confoundedinterest.wordpress.com/2015/04/14/about-the-credit-is-too-tight-meme-freddie-mac-average-ltv-and-dti-the-same-in-2001-and-2013/

Logan Mohtashami says

It's why I didn't have kids, it's awful I know to say, but in 1999 I did the math and I said it's 250K per child adjusting it through college and not looking to help out with shelter cost ages 25-29

I'm curious. How did you do the math? My understanding is other than basic shelter, most of the $$ for kids go into day care and college. So I'd imagine there is lot of variance there based on your situation.

$250k looks for median US family. Probably not in bay area
http://money.cnn.com/interactive/pf/cost-of-children/

Call it Crazy says

My guess is that the population growth will slow, mainly because these kids in their late 20's aren't getting married and aren't starting families, as they can't even to afford to pay for themselves, much less a wife, a house and kids...

They could start off as DINKs as opposed to SINK - Single Income Nasty Kids.
Until then, live in the parents basement.

Logan Mohtashami says

It's why I didn't have kids, it's awful I know to say, but in 1999 I did the math and I said it's 250K per child adjusting it through college and not looking to help out with shelter cost ages 25-29

There is no greater pleasure than having kids. Those smelly, pooping, demanding, hungry, trouble makers are worth more than all the money in the world.
By the way my 19 year old son is for sale. No down, take over the payments.

Strategist says

There is no greater pleasure than having kids

I would never disagree with this, but for me it wasn't in the works

ja says

$250k looks for median US family. Probably not in bay area

http://money.cnn.com/interactive/pf/cost-of-children/

Looking at that CNN article and they have it at $245,000 today, that's not even accounting for helping for College education which the cost of tuition has sky rocketed

Logan Mohtashami says

hat's not even accounting for helping for College education

LEt's hope that by the time they grow old, the college bubble will be bursted ;-)

ja says

LEt's hope that by the time they grow old, the college bubble will be bursted ;-)

I don't believe that can happen anytime soon because the real poor people in the American economy are those with just a high school education and the unemployment rate
for college grads is like 2.5%. So for a bubble to burst you need a mass amount of college educated working Americans to stop paying which it isn't in their interest to do

30% of all student debt are had by those who never finished college and 70% of the debt is under 14K

This cycle has been going on since 1978 and nothing has really be done to address it

Using today application data, it was never about tight lending, it was always about incomes and assets

Call it Crazy says

At the end of the day, everybody needs a place to live, but they also need to be able to PAY for that shelter. When you have 93 MILLION people not in the workforce, they aren't going to be going out and renting or buying their own places anytime soon.

Over half of these are over 55, mostly retirees. I don't think they are worried about going out and renting anytime soon.

bob2356 says

Call it Crazy says

At the end of the day, everybody needs a place to live, but they also need to be able to PAY for that shelter. When you have 93 MILLION people not in the workforce, they aren't going to be going out and renting or buying their own places anytime soon.

Over half of these are over 55, mostly retirees. I don't think they are worried about going out and renting anytime soon.

That 93 million are living somewhere now.
Most retirees who own their homes, own it free and clear.

Logan Mohtashami says

Using today application data, it was never about tight lending, it was always about incomes and assets

Lets say tight lending is not the problem. FNMA has announced plans to make it easier for first time buyers to buy their own homes. This will give a boost to housing.

Strategist says

FNMA has announced plans to make it easier for first time buyers to buy their own homes. This will give a boost to housing.

You mean pay 3% of closing sot, in terms of debt to income ratio that actually doesn't do anything to help that and it's a reason why the first Home Path program didn't take off so much.

Devils is always in the details sir :-)

Buyers must complete the full online HomePath Ready Buyer training course on the HomePath website and receive a certificate of completion

The buyer must be a first-time homebuyer (did not own a property in the past three years) with plans to reside in the property as their primary residence. Auction, pool and investor sales are not eligible

The request for closing cost assistance must be made at the initial offer, submitted on or after April 14, 2015

There has been assistance programs reducing the down payment to just 0.05% of a home.

One of the problems for lower down payment borrowers is that taxes have to be impounded which tends to be the highest cost factor of any purchase. Paying 3% of closing cost will help that factor, but it doesn't address the debt to income ratio or the down payment factor, it does allow more liquid asset to be used for a the down payment.

I understand why the government wants to start bending the rules

-5% GSE down to 3%
-Pay for 3% of closing cost

It's been the worst demand cycle for mortgage buyers at the lowest rate curve post WWII.

However, these are patches at best, the best thing solve this is for Americans to make more money, that will address the housing weakness in demand

Call it Crazy says

bob2356 says

Call it Crazy says

At the end of the day, everybody needs a place to live, but they also need to be able to PAY for that shelter. When you have 93 MILLION people not in the workforce, they aren't going to be going out and renting or buying their own places anytime soon.

Over half of these are over 55, mostly retirees.

Sorry Bob, nice try... Go check your numbers, they aren't retirees...

The number is 58% of not in labor force is over 55. So what percentage of over 55's are retired or on disability if you have the numbers in front of you? What percentage of the 54 million not in the labor force over 55's are living with their parents waiting to rent their first apartment? How about the 19 million not in labor force 25-54's (which includes housewives), are they all living with their parents waiting to get their first apartment also? Retirees and people staying in school longer is most of what is driving the labor force numbers. The participation rate of 25-54 has only dropped 2% in the last 20 years. I'm really sorry you can't grasp the math behind all this.

Good charts. Employment continues to improve. More people to buy homes. :)

Strategist says

More people to buy homes. :)

See how sluggish starts number were today, these are numbers coming in year 7 of the economic cycle with 3.75% rates. This was what I have been talking about for years going against the Housing is Nirvana crowd

http://www.cnbc.com/id/100533720

Mind that Ivy and I aren't on talking terms anymore... shocking ;-)

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

I offered my assistance to her firm in 2014 .... tsk tsk.... a lack of discipline

Call it Crazy says

Apparently, they don't know what they have in their own pipeline....

builders confidence and activity has had a big gap these last 18 months.

Total sales should be up at least 8%-12% this year with maybe some upside but in context to this being year 7 of the economic cycle with 3.75% rates it's just very soft and this is the market place for the wealthy with a very low 440K level to work from

Numbers, facts and data always wins out in the end

“All truths are easy to understand once they are discovered; the point is to discover them.”
― Galileo Galilei

Call it Crazy says

Logan Mohtashami says

See how sluggish starts number were today, these are numbers coming in year 7 of the economic cycle with 3.75% rates. This was what I have been talking about for years going against the Housing is Nirvana crowd

Wait, didn't we get a GREAT report from home builders yesterday?

You guys are such a disappointment. Here are some easy to see truths:
It was housing that caused the Great Recession of 2008, and it will be housing that leads to a Great Recovery.
1.They say homes are not affordable. How can that be when the affordability indexes clearly show housing is more affordable, even pre bubble.
2. They say there are no jobs. How can that be when the unemployment rate has kept improving in the last 4 years.
3. They say homes are a bad investment. How can that be when the CAP rates are so incredibly high? OC as an e.g.. was traditionally 2%, but now it's around 4% inspite of price increases since 2012.
4. They say payments are too high. How can that be when rental properties are being snapped up inspite of ever increasing rents.
5. They say loans are not easily available. You finally got the truth.

Strategist says

1.They say homes are not affordable. How can that be when the affordability indexes clearly show housing is more affordable, even pre bubble.

Once again, the affordability index is based on model that every single American has 20% down and a starting DTI ratio. I have seen hilarious index models in my life but this has to be the single worst one ever created.

If housing is so affordable why does it have it's worse demand on record post WWII adjusting to working population, living population and the lowest rate curve since the 1941-1945 as that was the last time in American history that the 10 year was this low

“All truths are easy to understand once they are discovered; the point is to discover them.”
― Galileo Galilei

Strategist says

2. They say there are no jobs. How can that be when the unemployment rate has kept improving in the last 4 years.

There are plenty of jobs, over 10 million created since job cycle turned in 2010 and yet the velocity impact on net demand

Once again, the worst demand post WWII adjusting to working & living population at the lowest rate curve post WWII

“All truths are easy to understand once they are discovered; the point is to discover them.”
― Galileo Galilei

Strategist says

3. They say homes are a bad investment. How can that be when the CAP rates are so incredibly high? OC as an e.g.. was traditionally 2%, but now it's around 4% inspite of price increases since 2012.

Housing is the cost of shelter to your own capacity to own the debt, that's always been my take, you will never see me whore myself out like real estate agents to push housing.
People buy homes to live in it, investors buy homes for profits

You should never need to urge to sell the thesis of shelter, if you do, that must mean something is wrong

Strategist says

4. They say payments are too high. How can that be when rental properties are being snapped up inspite of ever increasing rents.

Again, why has mortgage demand been so low? one of the factors that has been examined by a lot housing groups is that rents are high... and saving for a down payment is much more difficult now with rent inflation.

Catch the theme here

Strategist says

5. They say loans are not easily available. You finally got the truth.

and back to the biggest myth in American economics, Lending isn't tight at all, people simply don't make enough money to own a home and you can no longer lie on your application about your income.

All truths are easy to understand once they are discovered; the point is to discover them.”
― Galileo Galilei

800+ credit score, debt free, and the ability to put down at least 20%. I don't thing getting a mortgage would be a problem. People who listen to dirt-bag Realtard's and mortgage brokers end up with financial problems.

jvolstad says

800+ credit score, debt free, and the ability to put down at least 20%

If your DTI is under 43% you can easily get a mortgage. Heck if it's even 43%-50% you could still get a mortgage

There has been just too much emphaise on fico scores when they have the least impact on a the capacity to own the debt. Incomes and assets Debt to income ratio mean much for to the equation than a fico score does which is mostly used as a risk pricing model

Mark Zandi made this horrible thesis last year that I just couldn't let slide
http://loganmohtashami.com/2014/01/27/mark-zandi-its-the-economy-stupid/

Even the Wall Street Journal is finally throwing the towel and I have tried to press them on this issue for 3 years

Better late than never

Nick Timiraos ‏@NickTimiraos
Weakest. Housing recovery. Ever. http://on.wsj.com/1JNOEVv

https://www.youtube.com/embed/9OpIbiFmY60

Logan Mohtashami says

Strategist says

5. They say loans are not easily available. You finally got the truth.

and back to the biggest myth in American economics, Lending isn't tight at all, people simply don't make enough money to own a home and you can no longer lie on your application about your income.

Arrrgghhhh!