Logan Mohtashami's comments

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  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:18am   ↑ like (0)   ↓ dislike (1)   quote        

2nd block of data... look at the YoY pricing data line notice the difference


  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:19am   ↑ like (0)   ↓ dislike (1)   quote        

When you adjust it to inflation the YoY data line from a longer duration point 2012-2018 looks nothing like what we saw from 2002-2005 .. this chart proves all that this housing cycle bares no price inflation like we saw in the past

  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:19am   ↑ like (1)   ↓ dislike (1)   quote        

Not to mention it is very hard historically to have the same exact bubble in the same exact sector back to back
  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:22am   ↑ like (1)   ↓ dislike (1)   quote        

2nd phase of the data line is that a bubble needs speculation demand....

For pete sake people, mortgage demand is only at 1998 levels, even with over 155,000,000 Americans working, rates under 5% since early 2011, the longest job expansion ever recorded in U.S. history and soon to be the longest economic expansion in history .... 1998 levels, without historical levels of cash buyers existing home sales would have never printed over 5,000,000 sales once this cycle even taking it back to historical % not many prints over 4,700,000

No speculation demand what so ever


  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:23am   ↑ like (0)   ↓ dislike (1)   quote        

West coast data doesn't look like what it was in the past either

  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:25am   ↑ like (0)   ↓ dislike (1)   quote        

3rd phase

1996-2005 has good housing demographics, prime age labor force growth peaked in 2007, we are not running into a soft demographic patch, we are running into a positive one, this doesn't mean booming demand or housing blow out numbers .... but it does give you replacement buyers to hold things at bay

Be mindful real affordability is not as bad to college educated or skilled household home buyers because rates are lower in this cycle than the previous one and especially what it was from 1996-2000

  Logan Mohtashami   ignore (0)   2018 Mar 31, 8:29am   ↑ like (0)   ↓ dislike (1)   quote        

4th phase

Quality vs Quantity

First mortgage demand hasn't even hit the 21st century yet but the quality of home buyers in this cycle is the best we will ever see in our history.

Fixed low debt cost vs rising wages. You go back to late cycle lending which means FHA loans will be at risk at the later stages of the economic cycle.

Housing tenure has doubled in this economic cycle, we do have long term issues in the housing market from an economic standpoint but a housing bubble where demand and prices will collapse like Bitcoin did is not one of them

Prices will fall when inventory gets over 6 months but a collapse like we saw in the last cycle with massive distress sales .... No... We won't have a death cross 200 day moving average to deal with in home prices

  Logan Mohtashami   ignore (0)   2018 Mar 31, 1:40pm   ↑ like (0)   ↓ dislike (1)   quote        

We have housing inflation but we don't have a housing bubble.. a lot more has to happen for it to even start with the letter B




  Logan Mohtashami   ignore (0)   2018 Mar 31, 1:42pm   ↑ like (0)   ↓ dislike (0)   quote        

Plus we have other hot heated areas around the world that are showing some cracks
  Logan Mohtashami   ignore (0)   2018 Mar 31, 1:46pm   ↑ like (0)   ↓ dislike (0)   quote        

Since we don't have a cash out boom either which is a very good thing, the nested equity position of homeowners as equity protection is very good as well





  Logan Mohtashami   ignore (0)   2018 Mar 31, 1:50pm   ↑ like (2)   ↓ dislike (0)   quote        

On another note, forgive me, I forgot to wish everyone a Happy Easter and Passover


  Logan Mohtashami   ignore (0)   2018 Apr 1, 5:12am   ↑ like (0)   ↓ dislike (0)   quote        

mell says
I'd agree that the general US housing market is not in a bubble, but the bay area and other "hot spots" may very well be.


Does CA home sales look like bubble speculation. Now when a job loss recession hits that is your future supply that will impact home prices but the tech bubble bursting in 2000 lost 2,400,000 jobs all together and it really didn't do the damage that the housing bubble bursting did in terms of job loss, that burst cost near 8.8 million jobs.

Prices will fall of course with supply gets over 6 months but a bubble burst needs at min 35%-65% price declines in a very short time but in reality Bay Area home prices have go back to 2011/2012 levels if we really want to call it bubble



  Logan Mohtashami   ignore (0)   2018 Apr 3, 6:18am   ↑ like (1)   ↓ dislike (0)   quote        

Housing tenure .....




  Logan Mohtashami   ignore (0)   2018 Apr 3, 6:21am   ↑ like (0)   ↓ dislike (0)   quote        

Selling Equity is one factor in housing tenure, a lack of a reason to move is another but third which doesn't get talked about much is that if we have been building bigger and bigger homes for decades, especially in this cycle, why would a new home buyer ever move if he already has a 2,4000 4 bedroom room. These factors give legs to pricing at the cost of total sales and a reason why national mortgage demand is still only at 1998 levels.





Homes that sold for $500,000 or more accounted for 51.4 percent of all Southern #California home sales in February 2018. This is up from 49.6 percent in January 2018, and up from 43.9 percent in February 2017. For more: http://ow.ly/6Ezl30jefcx
  Logan Mohtashami   ignore (0)   2018 Apr 3, 9:59am   ↑ like (0)   ↓ dislike (0)   quote        

Malcolm says
It is almost impossible to lose a house unless additional cash out borrowing happened.


Late cycle lending risk typically comes with FHA loans or low down payment loans in general.

3.5% down plus the UFMIP added to the loan balance which means negative selling equity right off the bat, if the job loss recession hits the following year, the lack of selling equity could lead toward a future distress sale.

However, outside of that possibility, you shouldn't see that many distress sales when the next recession hits due to vast amount of nested equity accumulated in this cycle.

You can see supply rise from homeowners with equity and investors with no mortgage but distress sales will be limited to a degree because mortgage demand itself was light to start with the past few years

  Logan Mohtashami   ignore (0)   2018 Apr 3, 10:07am   ↑ like (0)   ↓ dislike (0)   quote        

2nd the new home sales demand cycle has been the lightest ever and these home buyers are the best loan profiles we will ever see so the lack of distress sales coming from this sector will be limited as well, let a lone that a lot of the news homes were bigger homes created for the upper income class in this cycle




  Logan Mohtashami   ignore (0)   2018 Apr 3, 10:36am   ↑ like (0)   ↓ dislike (0)   quote        

Malcolm says
Thanks, Logan, we may disagree, but you are using some good evidence. I’ll look at it in depth later.


Prices is all about supply and demand.... 2006-2011 was the holy mother storm of bad things happening at once

1. Credit bubble on bad debt ( good demographic patch from 1996-2005 to capture more home buyers)
2. Massive cash out bubble on bad debt
3. Very little equity build up in years 2003-2006
4. Demographics for housing were not favorable for home ownership post 2007 ( 2008-2019) light demographic patch

Add all that together = recasting distress supply + job loss recession supply Near 8.8 million Americans lost their job in the Great Recession

We just don't have that back drop anytime soon to have a similar result.

We are going to break the all time record for the longest economic expansion ever but that doesn't mean a massive supply of home buyers with mortgages in the cycle

  Logan Mohtashami   ignore (0)   2018 Apr 3, 11:02am   ↑ like (0)   ↓ dislike (0)   quote        

Malcolm says
$100,000 to prevent foreclosures?


Difference between Judicial states and non Judicial states in terms of length for foreclosure timeline

New York, Florida and New Jersey were running between 800 - 1,000 days before foreclosing on a home

CA had the Homeowners Bill of Right Act passed to try to slow the process down and attempt to save as many homeowners as possible

But in general distress sales are very low now as distress supply has dwindled down




CA specific, In November I will part of a economic housing conference in the O.C. to talk about CA housing and National Housing .. The Head economist from the CAR will be part of the panel and she will provide a lot CA data, where I will be more national data and the data will be firm then As seasonality kicks in August
  Logan Mohtashami   ignore (0)   2018 Apr 22, 9:02am   ↑ like (0)   ↓ dislike (0)   quote        

Logan Mohtashami says
Nobody knows except those that think they know.


This is a valid question and a good one since one my economic calls for 2018 was for an inverted yield curve which would indicate that a recession should start at some point 2019.

However, since it is almost May, it practically makes it impossible to have a negative 2 quarter GDP leading to job losses by next July once you account for these data lines added together.

- LEI ( Leading economic indicators)
- Claims
- JOLTS


  Logan Mohtashami   ignore (0)   2018 Apr 22, 1:41pm   ↑ like (2)   ↓ dislike (0)   quote        

lostand confused says
Does that account for immigration-legal and illegal?



The U.S. does have the great advantage over other developed countries in the sense that we do have a replacement workforce but the rate of growth of population has been falling for decades .

Over 327,000,000 Americans in the U.S.

Over 155,000,000 working

But we have the biggest job openings ever at peak was 6,300,000

I personally thought peak job openings would be 6,210,000 but if job openings grow toward 7-8 million and job growth slows to 80K-100K

Then we need a wall to keep people from leaving the country

  Logan Mohtashami   ignore (0)   2018 Apr 22, 8:42pm   ↑ like (2)   ↓ dislike (0)   quote        

Feux Follets says
Any charts that go into detail about the type, quality and wages of those wonderful jobs numbers ?


Real wages have had their best decade in a long time

  Logan Mohtashami   ignore (0)   2018 Apr 23, 5:16am   ↑ like (1)   ↓ dislike (0)   quote        

Feux Follets says
If "real wages" are having their best decade



Retail sales are at all time highs

  Logan Mohtashami   ignore (0)   2018 Apr 23, 5:21am   ↑ like (2)   ↓ dislike (0)   quote        

Feux Follets says
If "real wages" are having their best decade


Over 40 million homes have been bought in 9 years and over 120 million cars have been bought and all this in a light demographic patch as well.

Prime age labor force only came back to par this year from 2007

In fact the last 3 years have been the only time ever recorded in U.S. history where car sales stayed above 17 million even with car age fleet data at all time highs



  Logan Mohtashami   ignore (0)   2018 Apr 23, 5:24am   ↑ like (1)   ↓ dislike (0)   quote        

Feux Follets says
people working two and three jobs to make ends meet ?


Less than 5% of the work force

Multiple job workers are
  Logan Mohtashami   ignore (0)   2018 Apr 23, 5:25am   ↑ like (2)   ↓ dislike (0)   quote        

Feux Follets says


Feux Follets says
why are all of the figures in the charts "adjusted" ?
  Logan Mohtashami   ignore (0)   2018 Apr 23, 5:29am   ↑ like (2)   ↓ dislike (1)   quote        

Before anyone says the part time America workforce.

Prime age labor force full time work force is running really at 90% full time jobs. If you take ages 16-24 and 65 and above out of the data line.

So the part time American worker was also a strange thesis as well



  Logan Mohtashami   ignore (0)   2018 Apr 23, 8:33am   ↑ like (0)   ↓ dislike (0)   quote        

joshuatrio says
What about auto sales/subprime auto bubble?


This should create enough withdrawal from lenders to prevent car sales from having its record breaking 4 straight year of 17 million sales. However, in scale terms vs the banks leverage it's not a big deal. Low quality credit has been showing stress for some time now with this long economic expansion.

However, even myself I would be surprised if we end the year above 17,000,000 for car sales again, the Hurricanes gave a boost to car sales and that will fade if it already hasn't already

joshuatrio says
Logan, what are you thought on housing/real estate for the next few years?



Which aspect of housing are asking about, sales, prices, housing starts, construction workers?
  Logan Mohtashami   ignore (0)   2018 Apr 23, 8:37am   ↑ like (1)   ↓ dislike (0)   quote        

Goran_K says

I'd like to see information about housing starts if possible.



Housing Starts, Supply, Construction workers, breakdown of starts all here based on last week's report

https://loganmohtashami.com/2018/04/17/housing-starts-grow-with-monthly-supply-growth/
  Logan Mohtashami   ignore (0)   2018 Apr 23, 8:51am   ↑ like (0)   ↓ dislike (0)   quote        

joshuatrio says
1, 5 and 10 year outlook. Thanks!


1 up

5 years, that depends more and less on when the next recession comes into play creating more supply.

National supply is still to low for prices to go down and we won't have any forced distress sales coming before the recession

10 years, too long out

With home prices we all have to be mindful that real home prices aren't back to 2006 levels so until mortgage rates hit 5.875% or higher the real affordability factor toward home buyers isn't as bad as it seems



When you see monthly supply starting to get over 5.8 months that would be your first red flag on possible future price declines but demographics for housing actually get better years 2020-2024, they're light from 2008-2019.

If rates stay low real home prices have legs to go on for a while as long as monthly supply is under 6 months
  Logan Mohtashami   ignore (0)   2018 Apr 23, 8:55am   ↑ like (1)   ↓ dislike (0)   quote        

Big difference in this cycle vs the last ... That selling equity thesis I brought in 2015... = Housing Tenure

Bigger and bigger home thesis... well, a lot people have bought their main home already and this creates housing tenure to expand




  Logan Mohtashami   ignore (0)   2018 Apr 23, 10:26am   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
but eventually will move.


Not so fast!

Now come years 2020-2024 you should get some more mobility that is when I am forecasting to see some cooling down on this data line.

However...

If a new home buyer has a 2,500 sq ft home with 4 beds and has 2 kids, why would he or she ever move up unless they had more kids or job relocation.

Housing community completely missed this massive change in housing but come years 2020-2024 if we don't get more mobility it isn't because of lack of nested equity it is because people just don't want to move

  Logan Mohtashami   ignore (0)   2018 Apr 23, 10:29am   ↑ like (0)   ↓ dislike (0)   quote        

Real home prices matter... but what nobody ever talks about and I get a blank stare sometimes when I say this... Nested adjusted to inflation equity isn't as high as people think even though nominal equity is high.... so this is why selling equity is an issue outside the bigger home ownership thesis

Both together make for a complicated future outlook but by years 2020-2024 we should be having more married couples, more kids and people ready to be able to move more.

However, I would like to see some front line data on that before I am convinced
  Logan Mohtashami   ignore (0)   2018 Apr 23, 12:54pm   ↑ like (0)   ↓ dislike (0)   quote        

Feux Follets says
Savings rates are dismal,





Why would people save money into a checking account when interest rates are falling when their DPI income is either vested in their home or 401K plan

96 trillion dollars in net asset wealth

  Logan Mohtashami   ignore (0)   2018 Apr 23, 12:56pm   ↑ like (0)   ↓ dislike (0)   quote        

Feux Follets says
Perhaps a speaking tour is in order to convince those below the 50% quintile how well they are doing


If you want to make a case that uneducated and unskilled Americans can't make a cost of living wage I would agree with that as the data has show this for a long time

  Logan Mohtashami   ignore (0)   2018 Apr 23, 12:59pm   ↑ like (0)   ↓ dislike (0)   quote        

Feux Follets says
Plenty of categories to pick from and then select profitability, growth, performance etc. for each sector.




Let me get this straight you're actually complaining about the only time in U.S. history that we have had the longest job expansion on record and the longest economic expansion on record when real wage growth is basically at a 5 decade high in the same cycle too.
  Logan Mohtashami   ignore (0)   2018 Apr 23, 1:10pm   ↑ like (0)   ↓ dislike (0)   quote        

Feux Follets says
As for housing you yourself have stated numerous times on the forum the bar was set so low any numbers showing an increase would appear more positive than they actually are


This is very true, in fact I am looking for flat to negative growth in existing home sales even though purchase application data is up every week this year on a year over year basis at cycle highs with mortgage rates basically near cycle highs and nominal home prices above 2006 levels.

Today the report came in Nicely at 5,600,000 existing home sales

Data charts here ... cash buyers down, mortgage buyers up, housing tenure high... it doesn't warrant growth in 2018

https://loganmohtashami.com/2018/04/23/a-solid-existing-home-sales-report/
  Logan Mohtashami   ignore (0)   2018 May 20, 5:09pm   ↑ like (0)   ↓ dislike (0)   quote        




Huge difference between the cash out cycle now and the previous one


1. It isn't going to low quality credit Americans

2. Volumes are light compared to 2004-2006

3. Debt is as vanilla as possible No exotic loan structure out there

4. LTV's are a lot lower in this cycle

  Logan Mohtashami   ignore (0)   2018 May 20, 5:27pm   ↑ like (1)   ↓ dislike (0)   quote        

Strategist says
Credit cards Not OK


CC utilization rates are low actually, since this will be the longest economic expansion every recorded in history the low levels of delinquencies on lower quality debt should be expected

If anything debt expansion is light

Fixed debt cost vs income are near multi decade lows

  Logan Mohtashami   ignore (0)   2018 May 20, 7:51pm   ↑ like (0)   ↓ dislike (0)   quote        

Do some good for mankind.



Majority of student loan debt is under 15K

Less than 3% are over 100K

Majority of student loans delinquent are from college drop outs, avg balance under 10K

Don't feel bad for college graduated Americans, they make money, especially Grad students who borrower the most and make up 40% of all student loan debt




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