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Logan Mohtashami's comments

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Logan Mohtashami   2012 Nov 28, 6:19am   ↑ like (0)   ↑ dislike (0)     quote        

Economist, interesting take on things.

Would you care to ask this kid a question, who worked for Mommy and Daddy

Logan Mohtashami   2013 Mar 30, 1:34am   ↑ like (1)   ↑ dislike (1)     quote        

Credit is not easing. A few minor details might have changed.
There is a myth that lending standards are too tight and it's being pushed by Bernanke.. this is 100% false. Took a shot at Bernanke's delusion rhetoric on Bloomberg interview recently

http://loganmohtashami.com/2013/03/27/will-be-on-bloomberg-financial-talking-about-bernankes-myth-on-tight-lending-standards-the-real-housing-story/

At him in an article here

http://loganmohtashami.com/2013/03/25/bernankes-lending-standards-delusional-rhetoric/

Logan Mohtashami   2013 Mar 30, 10:24am   ↑ like (1)   ↑ dislike (1)     quote        

Honestly this is what I think about real estate agents and their market predictions. The worst are the ones that come on T.V. that claim to the best of breed.

http://loganmohtashami.com/2012/03/14/housing-experts-on-tv-beware-trust-yourself-first/

Logan Mohtashami   2013 Mar 30, 10:28am   ↑ like (0)   ↑ dislike (0)     quote        

I still can't believe to this day .. Well, maybe I can.. that the FED members and Bernanke still cry about lending standards. Every single time I get into this debate on this with Bloomberg, CNBC and Wall Street Journal.. Nada as a response. Nothing worth while to even debate.

http://loganmohtashami.com/2012/09/26/stop-crying-about-lending-standards/

Logan Mohtashami   2013 Mar 30, 11:22pm   ↑ like (0)   ↑ dislike (0)     quote        

For sure it's a sellers market as long as this inventory crisis is at bay. I follow weekly inventory numbers and 2013 needs to look like 2010 ( but better) to have a strong inventory cycle. We won't get that this year for sure.

Prices rising faster than incomes isn't a good thing. Even the Spin Mister Himself Mega Cheerleader Lawrence Yun of NAR finally admitted this in the last existing sales number.

One thing when rates finally go up but at higher prices. Unless we get massive job growth and income growth here in the US there is no way for millions of Americans to make up the difference in housing inflation

Logan Mohtashami   2013 Mar 30, 11:27pm   ↑ like (0)   ↑ dislike (0)     quote        

I am trying to get a debate going on CNBC with anyone who wants to take the side that lending standards are too tight. Plenty of people come on that show and cry like a baby that people can't buy homes even though FHA all you need is a sub par fico score, 3.5% down and DTI up to 43%.

My counter to Diana Olick when she came out last year and said Lending standards are too tough and they NEED to ease...

http://loganmohtashami.com/2012/03/30/diana-olick-just-a-few-questions-maam/

Logan Mohtashami   2013 Mar 31, 12:30am   ↑ like (0)   ↑ dislike (0)     quote        

don't forget Disability as well. Both those charts look awful. I believe S.S. disability might have slowed down though.

Still, case in point that this economic cycle has had it's crazy uptick in food stamps, unemployment benefits, disability usage.

I am 3 financial bubble thesis guy. We are the first modern day country to have 3 different financial bubbles with in 20 years. This shows long term stress. The steady rise in growth we have had since 1934 might be long the tooth. This is why we have to always inflate our way out of bust cycles. We are doing it once again. Mis pricing in housing asset once again is a result of it.

-globalization
-debt
-demographics
-technology

these 4 are going to limit capacity growth this century for us here in America. I mean at best... VERY best we are a 2-3% GDP country. The days of the economy of the 50's and 60's are done where we averaged 4% plus GDP for 2 decades.

Then the mother of all (*&^ ups are coming. After 2022 is when our mandatory payouts explode due to demographics. By 13-18 years all government revenue will go to Medicare, Social Security and Net Interest payments... every single cent and then the rest is going to be borrower ed at higher rates..

That is a scary long term economic model. Also, this is why all the budget talks basically end at 2022. They have no answer yet for the legions of old people coming to collect.

Logan Mohtashami   2013 Mar 31, 1:41am   ↑ like (0)   ↑ dislike (0)     quote        

What's your DTI with Taxes and insurances counted against you?

Self employed borrowers have to make a choice to either show more income ( pay more taxes) to buy a home.

There are a few lenders that will go stated with 30% down. However, for the most part after 2014 with CFPB, QRM and QM are all going to be on the same page.

That's the future, self employed borrowers show more income on your tax returns and you can get that house.

However, with standard guideline. Fannie Mae 3% down 680 fico and FHA 3.5% down and 640 fico that's not the problem. This is a income issue for majority of Americans.

You still got to 50 DTI on some products which I never agreed with. They should cap out everyone at 43% which they will in time.

However, years and years of weak income growth and this is what you get.

These big 4 are going to limit capacity growth here in the US for this century and thus limit income growth

-Globalization
-Debt
-Demographics
- Technology

Logan Mohtashami   2013 Mar 31, 2:06am   ↑ like (0)   ↑ dislike (0)     quote        

Ok, you have 14 homes then. I assumed you had 8 free and clear.

You can make case to be made to expand the limit of properties an investor can buy. That isn't the argument being made by the FED, NAR and others. They are talking more in respect to primary resident buyers.

In regard to traditional lending standards for the first time home buyer and traditional home buyer... buying a primary resident property.

With FHA and Fannie Mae products you would agree that the core lending standards

- down payment
- DTI ratios
- Credit scores

that those metrics aren't tight at all. That if people had the right DTI they could get a home with such a low down payment and credit score option out there

That's my argument, that Bernanke and Fed Members are looking at this problem in the wrong way

Logan Mohtashami   2013 Mar 31, 2:21am   ↑ like (0)   ↑ dislike (0)     quote        

Now there is something we can agree on

The process of getting a mortgage with all the paperwork is just insane. A lot of my clients are self employed so the Verification of Deposit LOE condition is simply madness

I have stories upon stories on that. Every time they did get the loan but the paper work is sick. I ran a joke on twitter than Fannie and Freddie are going to run DNA testing to verify people for patriot act reasons. People actually believed me

The put back wars has made loan paperwork really a loan ready to fight any defense against a future lawsuit. Audit sweeps that are happening with the banks just make it worse and worse.

This is a legal battle as Freddie, Fannie and FHA will sue everyone they can for money. So each loan is getting it's paperwork ready for a lawsuit.

That I can agree with the paperwork a lot times has nothing to do with the capacity of a borrower and the Anti- money laundry laws are making lenders way to conservative on LOE of deposits

Logan Mohtashami   2013 Apr 4, 9:37am   ↑ like (0)   ↑ dislike (0)     quote        

When Housing Bulls tell me they see a long term bull market in housing I say this

70% of the market place is fueled by cheap money that can't get cheaper and the other 30% are cash buyers a lot of them looking for good yield and investors

What can possible go wrong when rates normalize and housing inflation is already moving up because mini bubble 2.0 in prices is already here

Some get what I am trying say!

Logan Mohtashami   2013 Apr 4, 12:42pm   ↑ like (0)   ↑ dislike (0)     quote        

I actually think the Fed will revise it's thesis on it's metric on when to raise short term interest rates. 6.5% unemployment rate is tricking with the participation factor.

QE I see ending at the 2nd quarter 2014.

We don't want to mimic Japan. 0.34% on their 10 year note today. Was looking at some charts of them. What a UGLY mess!!!

However, our society is much different that Japan. We aren't savers but spenders here.

Logan Mohtashami   2013 Apr 5, 2:41am   ↑ like (0)   ↑ dislike (0)     quote        

(70% of house appreciation is based on interest rate... Based on what? You toss of numbers as if they meant something, when in reality you pull them out of your tail)

70% of the buyers are mortgages based so the interest rate factor plays a part into that equation) Since rates are at historically low levels we can't expect the next 10 years to have rates stay below 4%. These are roughly the trend reports that are being reported with sales numbers each month

14 11:43pm Thu 4 Apr 2013 Share Quote Permalink Like Dislike
Logan Mohtashami says

I actually think the Fed will revise it's thesis on it's metric on when to raise short term interest rates. 6.5% unemployment rate is tricking with the participation factor.

(6.5% is tricking with the participation factor? Wtf is that supposed to mean? Do you speak English?)

FOMC baseline metric for short term rates to rise is 6.5% unemployment rate. I don't believe the Fed will stick with that metric because of the trickling factor of the participation rate falling. Evident today with the jobs report. This means that the unemployment rate is falling faster due the lower participation. So, watch for the fed to revise that metric. At current trend they are looking at 2015 to be the first year to raise short term rates. You can read the previous Fed minutes they can explain it better that I guess because my English isn't great

(I'm glad mommy and daddy gave you a job writing mortgages, but, that hardly means you know anything)

I did a interview with Bloomberg financial last week making a counter argument against Ben Bernanke and his thesis on lending standards being too tight. If you find my thesis to be wrong against the Fed, then feel free to challenge it in any way

Here is a podcast of it

http://media.bloomberg.com/bb/avfile/Economics/On_Economy/vC4cgpLEdNzg.mp3

Logan Mohtashami   2013 Apr 5, 4:02am   ↑ like (0)   ↑ dislike (0)     quote        

Obesity charts look awful. Our entitlement problem in terms of payouts looking long term can be broken down to this. In roughly 13-18 years staying at current pace all Mandatory payouts will exceed government revenue. Which means every cent will go to people 62 and over and net interest payments. Globalization, technology, debt and demographics will limit capacity growth here in the U.S. This century. We are at best a 2-3 percent GDP country and starting 2022 and on our demographic aging boom will kick in and payouts wil rise.

Logan Mohtashami   2013 Apr 5, 8:35am   ↑ like (0)   ↑ dislike (0)     quote        

lostand confused says

Logan Mohtashami says

Unless we get massive job growth and income growth here in the US there is no

way for millions of Americans to make up the difference in housing inflation

Well, we are getting massive growth in food stamp usage.

Food stamps and S.S.D.

expansion on both have been epic

Looking out long term our aging demographics and the dependency ratio looks awful

Logan Mohtashami   2013 Apr 5, 8:48am   ↑ like (0)   ↑ dislike (0)     quote        

Wanna bet me!

I'll take that be that long term rates ( 30 year fix on the conforming side) can't stay below 4% for the next 10 years.

Fed has already indicated that they are starting to get concerned with their balance sheet. It will be north of 4 trillion dollars next year

If your prediction does come true then we have just become a bigger version of Japan. They just started the Godzilla of QE over there. I believe I saw their 10 year at 0.34%

That's not where we should be going.

Logan Mohtashami   2013 Apr 5, 9:10am   ↑ like (0)   ↑ dislike (0)     quote        

yup1 says

You are totally contradicting yourself. Low growth means rates can and probably will stay low.

The Fed has been more than 70% of the market place in term of purchasing assets.

Well over 3 Trillion dollars already and with MBS going at 85 Billion a month they are heading well past 4 trillion by next year

Fed members themselves are saying they are concerned with the Fed's balance sheet and they are thinking about unwinding process.

At some point they will stop. If you looked at the fund flows last year that intra 10 year note low came after the Spanish Default fear trade pushed a lot money into our bonds.

Looking at a 1.35 ish intraday level then we saw a move up above 2%

How many times historically has the 10 year note yielded lower than the GDP level. Doesn't happen often historically here in the US. However, if GDP growth estimated between 2-3% and the yield at 1.71 .. that metric can't stick. Something has to give. Either growth needs to reduce or yields have go higher because the Fed's intervention is coming to and end. I still believe by the 2nd quarter of next year the Fed calls it quits on QE

Now in regards to ZIRP. Fed has been clear on that. They want to see 6.5% unemployment rate before they start to raise short term rates. However, that is a different ball game than long term rates. We have already seen long term rates rise and mortgage rates have made a move higher since the lows put in last year

Logan Mohtashami   2013 Apr 5, 9:20am   ↑ like (0)   ↑ dislike (0)     quote        

USA IS JAPAN! 20 years ago

What we are missing here in the US now is the dollar collapse like what the Yen is doing now. The dollar has been acting stronger lately and while risk on asset rising.

Still we are the safety trade, our bonds and dollars. If that ever really goes away which I have see it in the numbers to believe then it's a different story.

Still, looking out long term our long term budget looks awful. It's just that the run away budgets don't happen until years 2022 and out so like D.C. does they will wait until very end to try to fix our mandatory payout problem.

Logan Mohtashami   2013 Apr 5, 9:23am   ↑ like (0)   ↑ dislike (0)     quote        

KarlRoveIsScum says

USA IS JAPAN! 20 years ago

Look what they did today?

The majority of western countries will all be like Japan.

it's called being FUCKED!

Western economic model you can see being questioned at this point. The growth is coming from the eastern countries.

50 Trillion of debt on the books

200 Trillion dollars of unfunded liabilities

This is a major sovereign/government debt bubble out there

Net interest payments years 2034-and out look horrible on any budget CBO, OMB, GAO.

Logan Mohtashami   2013 Apr 5, 9:29am   ↑ like (0)   ↑ dislike (0)     quote        

I am more of a 3 financial bubble thesis guy

To have 3 different financial bubbles with in a 17 year period hasn't happened before.

It shows economic stress. We have no choice here but to believe in a economic principle of inflating assets to get out of our financial mess.

This isn't a good long term model we have seen what it does in Japan. Our economic profile is much different that Japanese by nature we aren't savers we spend. We don't have a problem spending beyond our means where the Japanese, you can't get them going.

Their new QE over there is epic in it's size. It will be interesting to see if household spending picks up there

Logan Mohtashami   2013 Apr 5, 9:39am   ↑ like (0)   ↑ dislike (0)     quote        

yup1 says

In fact we should see that Japan did NOT inflate asset prices, even with all the QE

I believe off the top of my head the Nikkei 225 is still down 30% from the year 2000

All that QE and not even the inflated asset in equities. You can see why they want to de value the Yen and inflate the Nikkei. Desperate times calls for desperate measures but for them it's the same old act

Logan Mohtashami   2013 Apr 5, 9:57am   ↑ like (0)   ↑ dislike (0)     quote        

yup1 says

Why do you believe that for US it isn't the same old act.

It's the same act for us, it's just a different dance partner. That's why I question the real core long term GDP growth here in the US

We have low taxes, low interest rates and spent trillions of dollars to try to inflate our way out and we are 2 - 2.5% GDP country even with all that.

Jobs average monthly in 2011 and 2012 roughly 150,000 -155,000 a month

We have had a recovery from the bottom of 2009 in a lot economic numbers but look at what we had to do to get there.

1989 Nikkei ... wasn't that a bubble over there... What an Epic Disaster since then.

Logan Mohtashami   2013 Apr 5, 10:04am   ↑ like (1)   ↑ dislike (1)     quote        

yup1 says

But you go ahead and keep thinking all this QE shit is gonna work.

QE is a flawed concept, it's just inflates asset prices without relationship to real time incomes. I don't believe in an economic principal that is based around the Fed's wealth factor model.

Logan Mohtashami   2013 Apr 5, 10:05am   ↑ like (0)   ↑ dislike (0)     quote        

KarlRoveIsScum says

AT WHAT COST! TRILLIONS UPON TRILLIONS UPON TRILLIONS

Just to reach the avg from 6 years ago

8 Trillion dollars of liquidity for all that

Logan Mohtashami   2013 Apr 5, 10:07am   ↑ like (0)   ↑ dislike (0)     quote        

yup1 says

Massively increase the minimum wage.

Agree, We do need massive rise in incomes,

Still I believe

Globalization
Technology
Debt
Demographics

will limit capacity growth here in the US this century

Logan Mohtashami   2013 Apr 5, 10:45am   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

You can do that with Real estate, but you need to be willing to play a different game, than crisis inventory.

Have you taken a look at the national inventory levels here in the US. It has been awful

3 Big Reasons

-5.1 Million loans in either foreclosure or delinquency

-10 million plus homes underwater

- Housing Starts have had their worst 4 year period dating back to 1959. We simply aren't building enough homes

This is why we have less than 5 months of on sale supply in the market place today

Logan Mohtashami   2013 Apr 5, 10:52am   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

Man, you have a knack for hyteria.

Really, so do you think we can hit GDP levels over 4% like we did in the economies of the 50's and 60's on a consistent basis for a 2 decade period without the Fed being so involved?

We are at best a long term GDP capacity 2-3% the days of growing 4% with globalization, technology, debt and demographics in the works are over with. We had our time of expanded growth and we are slowing down

Even the Fed's long term capacity growth rate is at 2.5%, CBO, OMB, GAO none of financial think tanks has us growing at 4% GDP. Those days are over.

What we need to do is desperately innovated here in the US. We need to make something here in the US where we have supply and pricing power against the world.

The world has too many people that produce goods and that is why the economies of the 50's and 60's are dead to us

Logan Mohtashami   2013 Apr 5, 11:27am   ↑ like (0)   ↑ dislike (0)     quote        

yup1 says

Nikkei just totally busted through July 1985 levels, FUCK YA!

This one is for you Yup, The Epic disaster of Japan and QE to infinity and beyond

Logan Mohtashami   2013 Apr 5, 11:32am   ↑ like (0)   ↑ dislike (0)     quote        

Godzilla QE no good

Logan Mohtashami   2013 Apr 5, 1:41pm   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

There is tons of inventory for sale around the country

Logan Mohtashami   2013 Apr 5, 2:00pm   ↑ like (1)   ↑ dislike (1)     quote        

robertoaribas says

Well, I'm a mathematical economist. That is how I see it, now let's see how someone that mommy and poppy gave a job filing out loan docs see it...

Like I said, they poured in 8 Trillion dollars ( 8T numbers included everything not just QE and operation twist) to reflate the economy and they got what they paid.

Fed is doing exactly what congress has mandated it to do with the 2 mandates that it has

Commodity prices looked ugly back in October 2008, deflation was everywhere.

Velocity of QE hasn't been great but the 4 big of the economy have gotten better from the bottom of 2009

- Industrial production
- Job creation
- real retail sales
- real income

However, what metrics would you use to qualify enough GDP growth and avg monthly job creation to say enough of QE.

I project 2nd Quarter of next year because the Fed is showing some concerns of their balance sheet size.

Now for their metric on raising short term rates. I still believe they will revise their 6.5% unemployment rate metric to reflect the participation factor. That again is a 2015 or beyond story

Logan Mohtashami   2013 Apr 5, 11:30pm   ↑ like (1)   ↑ dislike (1)     quote        

David Losh says

Your chart is showing a new normal in inventory by going back to 2001.

So, even with household formation and population growth, you believe the natural flow of inventory on sale is going to under 5 month supply from now on.

What about the 5.1 million homes that are either in delinquency or in foreclosure process

Isn't that inventory that needs to come to market

Also, the 10 million plus homes that are underwater, isn't some of those homes not being put to market because the owner can't sell

I agree we had a major excess in housing but I can't agree that the new normal of on sale homes will be under 5 month supply. That would assume that none of the zombie homes will ever come to market and traditional homeowners won't sell their home.

Logan Mohtashami   2013 Apr 5, 11:39pm   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

Your chart is showing a new normal in inventory by going back to 2001.

Clearly you can see we had a excess bubble in housing as shown in the sales numbers. We just still have the massive overhang from the housing bubble in regard to delinquent, foreclosed and underwater homes.

Logan Mohtashami   2013 Apr 5, 11:44pm   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

I think you are seeing a shift in the way properties are marketed.

So what you're saying that there are more than 5 month supply of homes on sale nation wide, it's just not being represented in the numbers

Logan Mohtashami   2013 Apr 6, 4:09am   ↑ like (0)   ↑ dislike (0)     quote        

David Losh says

We will dominate the global economy.

So we will dominate the world economy but isn't our economy still based on a 70% consumption model and with anemic wage growth isn't that going to be problem to promote very strong GDP growth

Logan Mohtashami   2013 Apr 6, 4:27am   ↑ like (0)   ↑ dislike (0)     quote        

Let me shorten the time line and just provide a few cities

http://www.movoto.com/blog/market-trends/prices-are-up-april-2013/

Logan Mohtashami   2013 Apr 6, 5:02am   ↑ like (0)   ↑ dislike (0)     quote        

The rules of Bankruptcies have changed and Chapter 7 is much different than Chapter 13 these days.

Majority of the de leveraging done on the household side has come through foreclosures, short sales and bankruptcies but the capacity on consumption for those who filed Chapter 7 is limited to a degree.

Not to mention the massive rise of student loan debt that taken place here in the US. Unless we get income growth in a big fashion the after tax/expense incomes of Americans for the bottom 90% isn't that great. The top 10% will be ok

Logan Mohtashami   2013 Apr 6, 5:09am   ↑ like (0)   ↑ dislike (0)     quote        

This is only on the federal loan side of the equation. However, the massive debt taken on by students will limit consumption going forward.

You can't file for BK on Student loans

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