patrick.net

Raw says

For the CAP rates to fall in half, either home prices have to double or rents have to halve. Rents are not gonna halve.

Raw, you have No Clue what CAP rate is.

David Losh says

No one, let me repeat no one is going to pay a higher price for housing going forward. We are in another bubble right now, but I think even Schiller is warning us about that.

recovery! its 10-25% annual appreciation every year going forward...

good times are back again! buy now or get priced out forever!

From some time our economy is not producing any significant number in new goods or services.
Money can be made only through RECYCLING what we already have.

bgamall4 says

Actually, the bottom 10 percent of the top 20 percent should watch out as the article I wrote hints:

Interesting article. You're giving a bit too much credit to the "1%" in terms of direct investment. The true 1% are more about controlling the capital itself, not the direct investment. In real estate especially most of the actual direct investment activity occurs from the 2%-20% who are using capital provided by the 1%. Even HFs which are doing active RE investments aren't generally doing that in residential RE directly, but through another layer of LLCs which are comprised of investment bands who are being capitalized by HFs along with other private investors.

bgamall4 says

The housing recovery is 1 percent driven, and can be as real as much as the 1 percent has money and credit.

In order for 1% to buy up all the houses and rent them to the 99%'ers, each 1%'er would have to buy 100 houses (on the average), 1 for himself, and 99 to rent out. Does this sound realistic?

It's not real. It's speculation. The amount of people claiming to be successful RE investors on Patrick.net has risen at the same rate as prices in Maricopa County since last year October. There has to be some correlation.

REpro says

Raw says

For the CAP rates to fall in half, either home prices have to double or rents have to halve. Rents are not gonna halve.

Raw, you have No Clue what CAP rate is.

Here is the formula for CAP rates:
http://realestate.about.com/od/knowthemath/ht/cap_rate_calc.htm

Goran_K says

It's not real. It's speculation. The amount of people claiming to be successful RE investors on Patrick.net has risen at the same rate as prices in Maricopa County since last year October. There has to be some correlation.

And if you can completely destroy their arguments with simple 5th-grade math, it begs the question why we even waste our time arguing with these numb-nuts.

Job growth: Down
Unemployment: Rising
Wage growth: Non-existent
Housing price: Up

All the indicators of a speculator rally.

robertoaribas says

since Goran can't figure this out, 175,000 more jobs is 175000 more people that can pay rent...

Another lie from roberto the realtard. Here are the real facts:

The household survey showed 150,000 people dropped out of the job market. About 852,000 "discouraged workers" were not counted in the labor force, because they did not look for a job in the last four weeks.

The so called "underemployment rate" rose to 15%, its highest level since January. That includes people who are unemployed, as well as those who are working part-time because they can't find full-time jobs, and those that have looked for a job sometime in the last year.

robertoaribas says

Since Goran can't figure this out, 175,000 more jobs is 175000 more people that can pay rent...

What about the 190,000 jobs that were lost? The BLS just reported that unemployment just went up to 8.3% "mathematics professor who teaches at a major public university."

bgamall4 says

Yes, it sounds very realistic if hedge fund purchases drive it. Hedge funds lever up 10 to 1. It would be easy. There is simply too much money at the top of the food chain, and to much credit.

This is ridiculous. Do you even hear what you are saying. 100 houses per person. Also, hedge funds are not people, they are composed of people, so a hedge-fund of 100 people would have to own 10,000 houses and another 100 people who are not in the hedge fund would also need to own 10,000 houses.

robertoaribas says

never claimed I teach at a "major public university"... more made up bs from you...

the job number is a NET CHANGE number, nitwit... more people are working today, than were a month ago...

You claimed to be a lecturer at CAL (not that I believed you so it's a moot point anyway).

Regardless, here's data you could possibly decipher, but I'm not holding my breath:

Employment status (numbers in THOUSANDS)
Ciilian noninstitutional population
239,671 242,966 243,155 243,354 Change: +199

Civilian labor force
153,358 155,007 155,163 155,013 Change: -150

Participation rate
64.0 63.8 63.8 63.7 Change: -0.1

Employed
139,450 142,287 142,415 142,220 Change: -195

Employment-population ratio
58.2 58.6 58.6 58.4 Change: -0.2

Unemployed
13,908 12,720 12,749 12,794 Change: +45
Unemployment rate
9.1 8.2 8.2 8.3 Change: +0.1

Those are the most recent statistics reported by the BLS from June 2012 to July 2012.

You want to take your foot out of your mouth, or should I?

robertoaribas says

more people are working today, than were a month ago...

Wrong again. How can 175,000 be the net number of jobs gained, if only 163,000 new jobs were added and 195,000 jobs were lost. I think the math professor needs to go back to 5th grade, again.

Raw says

Here is the formula for CAP rates:
http://realestate.about.com/od/knowthemath/ht/cap_rate_calc.htm

Formula is good, but the trick is to know how to calculate NOI. This value VARIES greatly and only experienced investor, broker or appraiser is able to calculate it right way. It is also an area where manipulation takes place. It simply too many variables to be taken in account. Every real property is different. I’ve seen properties with NOI as high as 65% of Gross Anticipated Income and as little as 40% of GAI.
Anyway, is a great quick formula to arrive with possible purchase price.

I haven't heard a credible or believable argument yet on how home prices can rise outside of a speculator rally with rising unemployment and stagnant wages.

Goran_K says

I haven't heard a credible or believable argument yet on how home prices can rise outside of a speculator rally with rising unemployment and stagnant wages.

Well speculator rallies can last longer than anyone has the patience to wait. We saw this back in 2002-2007. But, one thing for sure, the longer it lasts, the more blood will be shed, in the end.

You know what is truly amazing is how much people let their wishful thinking overpower sane logic. After 5 straight years of "false rallies" during the spring season, people are still clinging on to the idea that this year is going to be somehow different, and their "hope" of a true recovery is finally going to pan out.

robertoaribas says

see this is what makes you goran, as a person, a complete asshole... you call me a liar with no shred of evidence...
while in grad school there, I lectured calculus, now piss off.

I didn't call you a liar, I simply don't believe a lot of what people claim about themselves on the internet. You do often boast a lot on patrick.net, and one of the things you commonly bring up is how you were a "lecturer at CAL", like I said, doesn't matter to me.

Now, what say you about those BLS employment statistics I posted? Or are we going to ignore that whole debate never happened? It's okay, I would too if I were you.

Goran_K says

I didn't call you a liar,

Too bad, because he is.

Call it Crazy says

I know the monthly report is a phone household survey and is not taken directly from the weekly numbers, but come on, if 1.4 Million file each month for multiple months and the rate only goes from 8.2% to 8.3%.... REALLY?????

Election year. One of the unemployment numbers you will never see is REAL unemployment (including long term unemployed). It's simply too hard to get an accurate number, but like you mentioned, all indicators show it's high (some estimate in the 15 to 20% range).

robertoaribas says

the job number is a NET CHANGE number, nitwit... more people are working today, than were a month ago...

Still no response Roberto? Am I still a nitwit? Is unemployment down?

Temporary bubbles or bounces need to be distinguished from any real recovery. It is also well known that bubbles can last quite longer than you'd expect. But without a grip on the massive debt floating around, starting from the federal deficit to state and municipalities deficits, no real recovery can take place. Doesn't matter whether it continues in inflation or deflation, or most likely stagflation, but while I am willing to believe personal success stories (which can happen) I must say that anybody arguing for a grand recover in spite of the cold hard debt facts is at least mildly delusional.

robertoaribas says

yes you are still a nitwit. It is not my job to run and do tasks you set for me, you obnoxious idiot.

You don't disappoint Roberto. :)

dunnross says

Well speculator rallies can last longer than anyone has the patience to wait. We saw this back in 2002-2007. But, one thing for sure, the longer it lasts, the more blood will be shed, in the end.

Well 2002-2007 had the benefit of endless amounts of liquidity and credit to continue going (aka no skin in the game). The current bubble trap is being funded by real actual investor cash, that's the scary part (if you're an investor of course).

mell says

I must say that anybody arguing for a grand recover in spite of the cold hard debt facts is at least mildly delusional.

Apparent investor logic:
"rising unemployment, stagnant wage growth, massive private debt is built into the market, we don't buy for today, we buy for the future"

So you are probably right.

First, who else would come out and say these things other than the NRA?

Second, and this will not be broadcast on any new media, I think if this trend continues, as it has for years, i.e. weak fundamentals, and high prices it is obviously some set up of some kind.

The hedge funds will but up the foreclosed properties at fire sale prices and rent them out, (Anyone remember the early 1990's when WE got to pick as some fire sale items?) If that doesn't work, an immigration gate will open and a new flood of willing debt slaves will be up for feast. Or something similiar to keep the bottom line.

Lastly, and there will be no news articles about this either, (But you can sort listings) Look at the crap for sale, damaged, no stove, microwave torn out, 1 bathroom no matter how many bedrooms. Sure! anything half way nice gets snapped up in a day.

Goran_K says

I haven't heard a credible or believable argument yet on how home prices can rise outside of a speculator rally with rising unemployment and stagnant wages.

I'll give you 3 reasons:
1. It is cheaper to buy than to rent due to falling interest rates and rising rents.
2. There is a huge pent up demand from people who waited to buy their home.
3. The perceptions have changed. People, especially investors with large amounts of cash believe home prices are going up. They start jumping into the market creating a self fulfilling prophecy.
--
And here is a bonus 4th reason.
4. It is cheaper to buy a home than to construct one.

I could see #2 being somewhat true, but people were saying that in late 2009 as well and then prices dropped in 2010 and 2011.

#3 is kind of feeding into my point of speculation.

Goran_K says

Since Goran can't figure this out, 175,000 more jobs is 175000 more people that can pay rent...
What about the 190,000 jobs that were lost? The BLS just reported that unemployment just went up to 8.3% "mathematics professor who teaches at a major public university."

The first thing to understand about #'s are the source and context.

The jobs report come from a survey of approximately 140K large employers and government agencies covering 33% of the countries payroll. That is 172K private and -9K Government for bet of 163K. ADP, which also have deep insight into these things as they handle payroll for smaller/medium size employers (have 500K business payroll clients) reported 163K jobs added.

The unemployment report comes from 60K phone calls. I got this once and well it went yes, yes, yes in 1 minute, listened but worked on my laptop so not sure what the question was. 60K over 100M+ household is essentially less than 0.1% coverage.

From that perspective, I believe the household survey is junk (as far as predicitng job growth) and Goran really needs to think about things a step further. Your posts are getting ridicolous. It's a classic case of knowing a little but representing a lot.

Call it Crazy says

The other piece that no one discusses is where do the approximate 350K WEEKLY first time unemployed go??? That's over 1.4 Million a month.... do they all go out and find NEW jobs the next week so they aren't counted in the unemployment numbers???

The unemployment office does not close whether the country is in an economic boom or recession. Business' are not static and people get fired and hired everyday for various reasons. 300K+ plus people file for unemployment weekly even in 2002-2007.

In any case, if you understand how these things work, less than 400K weekly claims correlate with net job gains. The fact that 350K are filed a week tell me jobs are being added.

SFace says

I believe the household survey is junk

SFace, c'mon man. That's ridiculous that you would dismiss a metric that has helped guide the nation's financial policy for over century because it doesn't fit your personal agenda of boosting housing on the internet. Now you're trying to claim that job growth is actually up. I don't know if you're purposefully ignoring data, or simply boosting housing at all cost, but it's intellectually dishonest.

Secondly, most important thing you failed to mention is that the sample is only composed of those who are actively looking for work (per the EDD database in California for instance). Those who are long term unemployed, aka "depressed workers" and haven't looked for work for 2+ years, aren't even called. New grads who are actively looking, but have never had employment, are also ignored. So the report actually under reports REAL unemployment by a significant margin, which makes my point even more acute.

But of course, the BLS report, from which the nations unemployment numbers have been calculated for the past 130 years is now "junk" and should be thrown out according to some random guy on the internet named "SFace" because he thinks it doesn't support his personal agenda of boosting housing at any intellectual cost on the internet, and he doesn't understand the effectiveness and mathematics behind polling/sampling. Sorry, that's almost laughable.

A "housing recovery" is dramatically lower prices by it's very definition. Thus, housing is recovering.

Goran_K says

Now you're trying to claim that job growth is actually up. I don't know if you're purposefully ignoring data, or simply boosting housing at all cost, but it's intellectually dishonest.

Yes, job growth is up and the context is whether there were jobs created or lost. Establishment surevy and ADP survey says 163K, while the household survey says negative 193K. Obviously, I undestand the mechanics of the surveys while you have no clue.

Goran_K says

Secondly, most important thing you failed to mention is that the sample is only composed of those who are actively looking for work (per the EDD database in California for instance).

If you are referring to the household survey, you are clueless there as well as you don't even understand the sampling methodology which are explained in the BLS.

Goran_K says

sface doesn't support his personal agenda of boosting housing at any intellectual cost on the internet, and he doesn't understand the effectiveness and mathematics behind polling/sampling. Sorry, that's almost laughable.

You are talking about yourself. Really, only a fool like you would think a household survey is more effective than an establishment survey reinforced with a ADP survey when talking about jobs growth.

"Both surveys are subject to sampling error. The payroll survey has a much larger sample size than the household survey. The payroll survey’s active sample covers approximately 486,000 business establishments of all sizes representing about one-third of total nonfarm employment. The household survey is much smaller at 60,000 households, covering a very small fraction of total employed persons. Over-the-month changes in household survey employment are therefore subject to larger sampling error, about four times that of the payroll survey on a monthly basis."

Bottom line, the sampling and (non-sampling error caused by cold calls) is huge in the household survey.

Here's the establishment survey 90% confidence that the job added was within 1.6 standard deviation or 100K. In statistical context, we are 90% confident job growth are somewhere between 63K to 263K

Here's what Goran is relying on 90% confidence that the job added are within 1.6 standard deviation or +/- 400K. So we are 90% confident jobs are negative 592K to positive 208K.

If you think the household survey is superior (which is what you are implying as you claim job growth was negative 192K), you will end up looking as stupid as the Case Shiller July 2012 thread.

SFace, #2 to be ignored on my list. Such a shame.

Of course there are limitations and nuance of each. In the end, establishment survey is much more accurate than household survey. The tighter margin of error proofs that.

And I say this even if the indicator singals different thing. Between August 2011 and July 2012, the household survey showed much more job growth than what is reflected on the establishment survey. If household survey is such a holy grail of job growth, did anyone bother to see what it did the past 12 months?

Or indicator #4 as used by Roberto, and SFace:

Outright lie. Even if all indicators, reports, and empirical data shows that job growth is non existent and the amount people hitting the soup kitchen is growing, simply make up an arbitrary lie about why you believe employment is actually growing in the face of all logic, and reason, to fit your housing boosting agenda.

Even if you are confronted by a reliable 130 year old metric that actually under reports unemployment, simply disregard the data, and continue making up your own statistics. That way, your personal agenda is always supported.

Time will tell (or not because being dishonest is too easy).

robertoaribas says

Goran_K says

Time will tell (or not because being dishonest is too easy).

goran, you don't have the intelligence to have a conversation...obviously my post went over your head...

I am buying my next home this friday, one more next month, and my rental income after all bills including maintenance and vacancy will cross $6000 a month (and $1000 a month in mortgage payoff)

What do you have again, except jealousy of me?

You will still be on this forum years from now writing how all statistics save yours are wrong, and housing is dropping, when I no longer work and live on a beach in the tropics!

Roberto, it's that sort of post that no doubt irritates Goran - you seem to have had no other purpose than to big yourself up.

robertoaribas says

my rental income after all bills including maintenance and vacancy will cross $6000 a month

Really, that's such an awesome amount. I can totally see you retiring in the tropics very soon with that princely sum.

Goran_K says

robertoaribas says

my rental income after all bills including maintenance and vacancy will cross $6000 a month

Really, that's such an awesome amount. I can totally see you retiring in the tropics very soon with that princely sum.

Well,6000 a month in a desert would be pretty awesome.