patrick.net

http://www.wsj.com/articles/why-a-stronger-housing-sector-isnt-boosting-the-u-s-economy-that-much-1441646534
Why a Stronger Housing Sector Isn’t Boosting the U.S. Economy That Much

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

Logan Mohtashami says

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.
I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

Strategist says

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.

I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

As always, I have been posting these chart for 6 year

The mathematical demand curve for these price homes is little, even working off a 230K low base, 7 years into the economic cycle you're fighting to get 500K total K sales

Why would mortgage buyers over pay for a new home when there is a 80 - 100K gap in median prices

The people who were saying the demand curve would be strong are missing 8 million home buyers in this cycle now... where are they?

Renting

Diana Olick ‏@DianaOlick
#Mortgage lending standards easing according to new @FannieMae survey http://www.fanniemae.com/portal/research-and-analysis/mortgage-lender-survey.html …

They weren't tight in the first place and I am reading its' not tight anymore

Lord have mercy on their souls

Logan Mohtashami says

They weren't tight in the first place and I am reading its' not tight anymore

That is where we disagree.

Logan Mohtashami says

Lord have mercy on their souls

:)
That is where we disagree again. Atheists have no souls.

Strategist says

That is where we disagree again. Atheists have no souls.

You know my degree was in history and senior thesis on the crusades :-)

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Logan Mohtashami says

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

Strategist says

Logan Mohtashami says

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

Tradersl@aol.com

epitaph says

Why are you upset about the Fed's decision to not raise rates when none of your indicators have been met?

LEI I was talking about

JOLTS

Claims

No time in American economic history post WWII we had these numbers on these 3 key reports and have rates at Zero when core inflation YTD is over 2% and the massive importing of deflation comes from one trick pony economies and those we a debasing currency

The best part is that the world is begging us not to raise rates, like a dog... pathetic
World economies have a demographic issue we don't have that problem here with our young work force coming on line in a few years

So I AM PISSED, their language was even worst

This is Yellen to me now

bgamall4 says

Bethany McLean

bgamall4 says

She is, IMO, an evil woman.

I was only talking about her looks

The entire FannieGate thing is a giant fraud I always get into twitter fights with that group

Newbie123 says

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

Guidance and wording of global concern is new now and it's another reason why I hated that Fed meeting, one of the worst Fed meeting I have seen since I have been in finance dating back to 1996

Market should sell out because if you raise a freaking quarter when ECI wage inflation was back where it was in 2004 when the F.F. was at 1% then the Fed is saying the economy isn't strong enough to handle a .25%

Newbie123 says

Strategist says

If they raised the rates by a token, the stock market would have rallied, and bond rates would have actually dropped.

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

1. Not raising the rates indicates a weak economy still in need of help. Especially after months of claims by the Feds of an improving economy.
2. Uncertainties are now sky high. Wall Street hates uncertainties.
3. The stocks rallied right up to the Fed announcement, on expectations of interest rates being raised.
Nevertheless, this is wall street. Some major signs of an improving economy, and the stocks will start rallying again.

bgamall4 says

He said banks cannot pay the interest

Ehhh, what about all the variable rate business loans? A fed hike would allow banks to increase their interest take on these loans. Also, cash deposits are at a record high, so banks have no incentive to pay higher rates to depositors even if there is a modest rate hike.

Here was my case for why America can take a rate hike

1. LEI is at cycle high
2. Claims are at a historic low
3. JOLTS data line shows 5.8 Million Job openings
4. Prime working age is at 81% with a missing of 2.8 million Americans from that group at the peak of 2007 and with JOLTS
at a opening of 5.8 million it's a Skill gap mismatch as college grads are at a 2.5% Unemployment
5. ECI wage inflation is basically where it's at when the Fed raised rates back in 2004 and back then we had 1% Fed Funds

See YTD wage inflation pressure

Average weekly earnings in the private sector in San Francisco are up 9.6% YoY: https://research.stlouisfed.org/fred2/graph/?g=1SD4 …

Average weekly earnings in Detroit up 5.7% YoY: https://research.stlouisfed.org/fred2/graph/?g=1SDa …

Portland? Up 9%: https://research.stlouisfed.org/fred2/graph/?g=1SDb …

Seattle up 7.6%: https://research.stlouisfed.org/fred2/graph/?g=1SDf …

Boston up 7.3%: https://research.stlouisfed.org/fred2/graph/?g=1SDg …

One of the few times I agree big time with a Fed Member

Bullard: The case for policy normalization is quite strong since FOMC objectives have essentially been met http://bit.ly/1Mj7jdA

This slight cool down in MI2MP is actually bullish for new home sales, either due to make up shift is different or discount on top

Obviously we don't have the same back drop in terms of demand and fake demand like we had in the housing bubble, but bigger homes are great for profits bad for affordable crop

Unlike existing homes, new homes market is a 90% mortgage market place running at 500K Sales, so the market place to effective rate inflation impact would be seen there.

This is a reason we have seen a cool down in new home sales this from the start and running on 5 months of negative revisions and 2015 will be the 3rd miss new home sales year in a room unless we get a 574K print in every report until the end of the year

"bumps out the back" a surfing term used for a set of waves coming in. we're almost done the second bubble, but the builders in my location are still doing the estate homes in the gated communities into at least next year. 4000 to 5000+ sqft i doubt they will be discounted but we'll see.

landtof says

"bumps out the back" a surfing term used for a set of waves coming in. we're almost done the second bubble, but the builders in my location are still doing the estate homes in the gated communities into at least next year. 4000 to 5000+ sqft i doubt they will be discounted but we'll see.

That ratio chart above I believe it's used for existing homes which is much cheaper than new homes,
CA has been heavy this cycle for Luxury apartments. However, CA does have some major dual income factor model home buyers meaning people making over 190K combined income.

My client base is between 128K -343K with a bulk in to 179K- 257K, so those people can afford homes and this is taking out a lot of the foreign buyers out of the equation.

I know my parents home that we have been trying to sell at 1,945,000, we had no luck this season, even though our next door neighbors sold their homes for 2.5 and 2.45 million... both foreign buyers and both cash

In the past 20 years the Fed's favorite inflation metric, the PCE price index, has been below 2% half the time.

Logan Mohtashami says

Obviously we don't have the same back drop in terms of demand and fake demand like we had in the housing bubble, but bigger homes are great for profits bad for affordable crop

Home builders cater to whatever demand there happens to be. High end buyers tend to have more down payments, higher incomes, and better credit.
Buyers on the other end of the spectrum are not getting the loans they deserve. When that changes, builders will build lower priced homes.
I also don't see anything close to a housing bubble in the face of an accumulating housing shortage.

Strategist says

I also don't see anything close to a housing bubble in the face of an accumulating housing shortage.

Inventory for new homes is at 5.4 months
Sales demand curve is terrible in this cycle, I always give the builders super kudos for not mass building single family homes, they knew always the demand curve was for renting.

This was a great idea for the builders

Logan Mohtashami says

If people can't buy, they will rent. Housing demand in terms of units is always a function of demographics.
I think renters who would rather own, but can't, are victims of post crash lending practices.
This is very unfair to those who want to own, but can't. Forced to pay higher rents, forced to watch home prices rise. Stuck in the middle.

Strategist says

If people can't buy, they will rent. Housing demand in terms of units is always a function of demographics.

Very true, hence why we have a renting cycle, that won't change until years 2020-2024. The best thing to do is cool down the rental inflation.

On that note the builders have their first rental community which ever new home they built is a rental, which is a first I believe with single family homes

Zillow: US home values up 3% over the last year, but 28% of homes saw values go down http://zillow.mediaroom.com/index.php?s=28775&item=137190 …

As always many different Price Index for housing

Logan Mohtashami says

Very true, hence why we have a renting cycle, that won't change until years 2020-2024. T

Partner, just 5,4,3,2 years ago, you ranted on and on about the "fakecovery"… Graph after graph disputing housing markets recovering…

In reality, what happened? prices went flying up everywhere!

Literally EVERYWHERE!

Soooo, why do you continue making predictions about the future, given that EPIC FAIL!!!!???

You couldn't see the biggest market movement in history, staring it in the face, with all your graphs and data. Yet still, you think your opinion is relevant???

Let's look at some of your past "wisdom"

http://loganmohtashami.com/2011/12/14/housing-emperor-exposed/
http://loganmohtashami.com/2011/04/http://loganmohtashami.com/2012/03/09/housing-zombies-last-stand/http://loganmohtashami.com/2012/04/02/housing-actions-speak-louder-than-words/

Anybody listening to your advice then, and not buying a home made the mistake of a lifetime. You couldn't have been more wrong if you tried!

Partner, just 5,4,3,2 years ago, you ranted on and on about the "fakecovery"… Graph after graph disputing housing markets recovering…

In reality, what happened? prices went flying up everywhere!

Literally EVERYWHERE!

Soooo, why do you continue making predictions about the future, given that EPIC FAIL!!!!???

You couldn't see the biggest market movement in history, staring it in the face, with all your graphs and data. Yet still, you think your opinion is relevant???

Let's look at some of your past "wisdom"

As always, after Spring of 2012 when inventory came below 6 months, ever single Housing prediction article for the year had price gains
You can be my guest at look, Every housing prediction article for the year has price gains, all of them as the model is very simple

Under 6 Months and lack of distress sales to conventional sales, always price again. :-)

So your thesis is flawed and by looking at your article you picked out I can see why, really went back too didn't you and forgot to add all the price gain predictions
Clever, but that only works on the novice... good try though

"You couldn't see the biggest market movement in history, staring it in the face, with all your graphs and data. Yet still, you think your opinion is"

On this, to my knowledge not one person that I know of on wall street or the economist that even I have talked to had the thesis that this cycle wouldn't have enough qualified home buyers in America.

Per the evidence that the mortgage demand not only has been the weakest on record, it will go down in American economic history as the worst adjusted to popualtion demand curve from main street ever recorded at the lowest interest rate curve post WWII. Which my lord was my core thesis for 6 years, and still to this day, that has held up at the number #1 housing call of this cycle.

Evidence #1

Evidence # 2
If you take out the 20% cash buyer metric roughly been 1,000,000 extra homes bought with cash 20% above historical norms
the net demand curve for existing homes even in 2015 is actually not that much from the Great Recession lows

Evidence # 3

Even with the biggest collapse of net sales for new homes, this has been the weakest recovery ever recorded on the demand that has ever been taken

blastfrompast says

Anybody listening to your advice then, and not buying a home made the mistake of a lifetime. You couldn't have been more wrong if you tried!

I always found this amusing, since I work in the mortgage industry which would mean I am working in an industry in which I tell my clients to not buy a home. I have found this to be very funny, it's been a favorite of one particular person. So, to this particular person , your sentence structures hasn't changed in 5 years. However, I do admire your passion and logic. Notice that after Spring of 2012 every single price gain was positive. However, if that was the only thesis used to show a housing market strength , then housing bubble in itself was great housing market every recorded. However, price isn't the only variable as we can see in this cycle, supply means more to pricing that strong demand.

The beauty is that I can't hide behind a fake name, I have to bring the data, which has to be correct, because if it wasn't no body would care

But

Lets take a look at who cared over the years

CNBC
Countless times over the years
https://www.youtube.com/embed/o9O_FDLPdgA&t=10m35s

Bloomberg
Tons of interviews over the years

The only person asked to speak at the BNY mellon Stock Conference for Housing economics back in December at the Ritz ;-)

Social Media Star Article 2014

http://www.nationalmortgagenews.com/news/origination/social-media-star-uses-online-engagement-to-boost-loan-volume-1042437-1.html

Even when the Fed didn't hike rates, who do they ask to comment?

http://nationalmortgageprofessional.com/news/55772/fed%E2%80%99s-refusal-raise-rates-greeted-mixed-emotions

University Of Chicago Booth Conference talking about Housing economics a

Even the UCLA Anderson Housing Conference :-)

So, I understand why you have to be the troll, I understand the appeal hiding behind a fake name, making a false narrative to get a little tickle, I 100% get that

So, please, keep this up, everyone has to have their troll followers and to you who says the same sentence I think for years now....

If you want an autograph just let me know where to send it buddy

In front of City Hall, one of the articles they wrote about me ;-) I got nothing but love for ya, because in the end

Math, Facts and Data wins out over any troll, and that's why if you google my name and google your real name, nobody is going to know who you're.....

blastfrompast says

Logan Mohtashami says

If you want an autograph just let me know where to send it buddy

Damn...blastfrompast got schooled.

debyne says

Logan Mohtashami says

If you want an autograph just let me know where to send it buddy

Damn...blastfrompast got schooled.

Not really. The question wasn't are you a show off egomaniac? nor was the question does he look good in a suit? Rather, it was can he explain why he was so utterly, terribly, wrong in all of his articles claiming the housing market was not recovering. :

you wrote article after article negative to anyone considering buying a home, during the best years in history to buy a home. I was on here then, saw the debates.
Care to tell me what has happened to home prices since you wrote these beauties? (and another pic of you in a suit pretending to be a journalist doesn't count!)

http://loganmohtashami.com/2011/12/14/housing-emperor-exposed/
http://loganmohtashami.com/2011/04/http://loganmohtashami.com/2012/03/09/housing-zombies-last-stand/http://loganmohtashami.com/2012/04/02/housing-actions-speak-louder-than-words/

blastfrompast says

Not really. The question wasn't are you a show off egomaniac? nor was the question does he look good in a suit? Rather, it was can he explain why he was so utterly, terribly, wrong in all of his articles claiming the housing market was not recovering. :

Mr. Clumpus or Sebastian Klay, now using the Blastfromthepast

Let me give you a hint, sentence structures are like photographs so as soon as I saw the !!!, ??? I know its you Mr. Clumpus. You're the only person on the internet that does this.

Which I don't mind our conversation on CNBC, trust me, I always enjoys our chats.

Let's look at your thesis

blastfrompast says

you wrote article after article negative to anyone considering buying a home, during the best years in history to buy a home

Basically I said the demand curve was weak and will be weak

Thesis number #1

We simply don't have enough qualified home buyers in America once you X out the Cash home buyers to have a real recovery

We are in year 7 of the economic cycle, interest rates have been below 5% since early 2011

Lets look at the data again

#1 Purchase Applications

#2 Exiting home sales using the most recent data now down -11.3% adjusting to population compared to 2000
this with roughly an extra 1,000,000 homes bought with cash which means headline demand from mortgage buyers is basically near the recession low even in 2015

#3 New home sales, are down -50% adjusting to population going back to 1963. This is a 90% mortgage market too

So Mr. Clumpus, Sebastian Klay, or Blastfromthepast, whatever name you use.

Remember my core thesis stuck this entire cycle, no one else had this right but me and if prices is all your care about then you and are always talking about 2 different things.

As you said you're an investor for 35 years which puts you between age 57-65, correct? You do rehab projects like you said, which makes you a home flipper I imagine

All of this is fine and good but you're using 2 articles that actually makes my point today... Remember you don't believe in renting nation, or that the homeownership rate is a problem, To each their own sir

Math, Facts and Data matter, Mr. Clumpus I love your passion and fire, it's a good thing. Until we chat again, and new home sales are out tomorrow, I am sure I will see you as Sebastian Klay, tomorrow roughly 7:05 AM time pacific

Have a good evening Sir

Logan Mohtashami says

Mr. Clumpus or Sebastian Klay, now using the Blastfromthepast

Let me give you a hint, sentence structures are like photographs so as soon as I saw the !!!, ??? I know its you Mr. Clumpus. You're the only person on the internet that does this.

Which I don't mind our conversation on CNBC, trust me, I always enjoys our chats.

Wrong again! You sir, are indeed consistent! and always wrong!!!

Logan Mohtashami says

Basically I said the demand curve was weak and will be weak

Thesis number #1

We simply don't have enough qualified home buyers in America once you X out the Cash home buyers to have a real recovery

Weak demand. Hmmm, I seem to remember from my economics courses, weak demand causes a falling equilibrium price. How has that worked out these past 6 years?

In your own city, prices are up 50%. How is that possible with such weak demand?

In my town, they are up 100%.

Doesn't sound like weak demand to me!!!

carry on, post a few more graphs. We both know you are a silly boy mommy and daddy let work in their mortgage business!

blastfrompast says

Wrong again! You sir, are indeed consistent! and always wrong!!!

Evidence it's you Mr. Clumps, you have been doing this for 5 years and you're the only person who does this so I know it's you sir :-)

Sebastian Klay Logan Mohtashami • 2 days ago
You guys have ruined the programs with your fraud!!!.. GET IT!!!... The program is a solid one... You ruined it!!!... You are quite pathetic

blastfrompast says

Wrong again! You sir, are indeed consistent! and always wrong!!!

Oddly enough Sebastian Klay using the same exact sentence structure

I am not sure why you're hiding anymore, It's me , we have been doing this dance for 5 years now

blastfrompast says

Weak demand. Hmmm, I seem to remember from my economics courses, weak demand causes a falling equilibrium price. How has that worked out these past 6 years?

Under 6 months of Supply and you have pricing power for housing that is the model I have always used and hence the that is what happened in spring of 2012 even though total inventory was below 6 months, the start of the year in 2012 didn't

On another note under your own thesis you would be implying that the housing bubble was a great housing cycle because it was price, correct? Nothing else matters but price and that the price gains didn't need internal reading

blastfrompast says

We both know you are a silly boy mommy and daddy let work in their mortgage business!

One man in Arizona who uses that line every time with me?

Roberto? maybe is that you, can't be you, we had such a great chat last time we talked about when we thought the labor market was going to get tight, remember?

If it is you? How is family doing?

As always, nothing but love for you, it's been a fun 5 years

you seem to be 100% sure I am two different people…. Amazing!

blastfrompast says

you seem to be 100% sure I am two different people…. Amazing!

This is a good question

Mr. Clumpus or Roberto ... but as soon as you said Mommy and Daddy I knew it was Roberto

Which I don't know why you're hiding we had some good charts economic talk before you left.

Roberto Aribas is back! That is a blast from the past. How is Arizona? Still teaching and dating your students? Sometimes that is the easiest way to earn an A.

.... or get laid.