Home Builders, New Homes Sales And The Affordability Myth
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2016 Jan 25, 10:08am 26,573 views 120 comments
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Strategist
2016 Mar 22, 7:27pm
Notice the builders are acting better!
At this time next year, ITB will be 50% higher at $40.00. IMHO.
_
2016 Mar 22, 7:30pm
At this time next year, ITB will be 50% higher at $40.00. IMHO.
Ughhhh
You better had picked up some shares with the recent dip!
Strategist
2016 Mar 22, 7:34pm
At this time next year, ITB will be 50% higher at $40.00. IMHO.
Ughhhh
You better had picked up some shares with the recent dip!
Have enough shares on ITB. Picked up 100 option contracts (leaps) on the dip. I'm very very confident.
Strategist
2016 Mar 22, 7:37pm
Picked up 100 option contracts (leaps) on the dip
fair enough
What about you? Go for the leaps. You will thank me one day.
_
2016 Mar 23, 5:38am
As always.... Key is revisions with today's numbers, revisions positive that is the bonus for trend.
4%-8% growth this year for new home sales with upside if median prices cools down
But for that to happen you need to start hitting the headline numbers with no negative revisions
_
2016 Mar 23, 7:19am
Number of people age 25 - 54 vs. # new homes for sale.
The cycle is very soft, weakest housing demand cycle ever for a up cycle, but for this report
Revisions were positive, that's the key.
Already anyone who was looking for 20% growth again is going to be wrong for the 4th year
Comps are still negative year over year but the comps get a lot easier from now on because March 2015 was the start of the decelerating growth
_
2016 Mar 23, 7:43am
The sickness of using at mid 500K number as a high comp in year 8 of the cycle with 4% rates
ja
2016 Mar 23, 8:38am
http://loganmohtashami.com/2016/01/25/home-builders-new-homes-sales-and-the-affordability-myth/
I'm wondering.. instead of the sale price, would you have a graph reflecting interest rates (like mortgage payment for a 30yr mortgage)? It may give a better snapshot of where the bubble is/was.
_
2016 Mar 23, 8:50am
interest rates
One of the major flaws with the housing pundits in this cycle
They assumed as they said, Housing is the most affordable ever... because 30 year mortgage were at a post WWII low for this cycle and really have been under 4.5% since 2013 and under 5% since early 2011
What they don't take into consideration, is the size of the debt and PITI inflation matters more to housing affordability than just the rate, rate is a one variable housing inflation metric
Bigger the homes, bigger the debt = the bigger total payment
Hence why new home sales missed sales expectations 3 years in a row in years that some of these pundit were forecasting 20%-40% growth
They were using the lowest level of sales, starts and permits to call for a V shape bounce
which this is the reality
_
2016 Mar 23, 1:23pm
KBH
It's a crap builder but it had value $10 now it's up to $14 if anyone took that risk!
_
2016 Mar 23, 1:34pm
After today's negative YoY print, the next 4 months is really it.
If you can't show growth on the YoY prints in the next 4 months with no negative revisions, then ever my 4%-8% growth metrics are simply too high.
Considering how low new home sales are at, this isn't asking a lot
_
2016 Mar 23, 3:23pm
George Pearkes â€@georgepearkes My end of day wrap-up today. "Housing Supply Still Weak"
https://www.bespokepremium.com/the-closer/the-closer-32316-housing-supply-still-weak/ …
(Another text book chart to show that the low inventory to sales thesis isn't correct )
new homes are a luxury item. latest and greatest style, what you see on tv with fixer upper and all that bullshit.
_
2016 Mar 24, 6:43am
KBH, it wasn't that great of a report ... but as you can see a trade can be done at any point of a cycle, $10 to $14 was the run, I wouldn't be pushing it here
Strategist
2016 Mar 24, 6:48am
KBH, it wasn't that great of a report ... but as you can see a trade can be done at any point of a cycle, $10 to $14 was the run, I wouldn't be pushing it here
You ain't seen nuttin yet. Just wait till the middle of summer.
_
2016 Mar 24, 7:04am
You ain't seen nuttin yet. Just wait till the middle of summer.
That's the problem, flattish growth for the rest of the year, sales are up only 4% year over year even with their horrible misses from last year
This is value play here, the stock from 2013 has been horrible, bastard builder child but then again that's why it was trading with a low liquidation value at $10
In any case, this is the worst one on the crop
But to your point
You have 4 months to show headline growth on the new home sales report as for now we down negative growth year over year .... No revision negative, if that doesn't happen
There is a change we get flat to negative growth this year in total new home sales.
I am still looking for 4%-8% growth with some upside if median home price falls since we are working only from a 500K level, but man... have to have to sales come through in the next 4 months
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http://loganmohtashami.com/2016/01/25/home-builders-new-homes-sales-and-the-affordability-myth/