patrick.net

http://www.census.gov/compendia/statab/2012/tables/12s0982.pdf

https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=country:US&dl=en&hl=en&q=population%20of%20the%20united%20states

We have enough housing units for half the population.

How is that a crisis of supply?

I just provided you with data for my market area, and you'll find that what you rely on is the Multiple.

I would have to go to each market place to pull the number of sales, I'd be going to each assessor's office web site to pull numbers.

Do you know another way to do that?

The system of the Multiple Listing Service, and Brokerages is rigged.

David Losh says

The system of the Multiple Listing Service, and Brokerages is rigged.

Let's say I agree with this statement.

That means you believe there are more homes on sale ( Non MLS) than actual homes being reported in shadow inventory.

If not, then do you a metric of homes that would prove your argument valid

For me we would need at least 2- 2.5 million homes that are non MLS listed.

Would you agree then that your thesis means there needs to 2-2.5 million homes across the US that are listed but non-MLS listed.

We also have this which shows 19% of sales through the foreclosure process:

http://www.realtytrac.com/content/foreclosure-market-report/q3-2012-foreclosure-sales-and-short-sales-market-report-7499

Apples to Apples debate

If ann. Sales are running at 5 million for the NAR ( 2013) then you should easily find at least 2 -2.5 million homes that are on sale inventory but not being listed by MLS.

If you can find me 2- 2.5 million homes, then I can think about this being a debate

Remember the keys phrase is Apples to Apples

Number of on sale inventory, rolling ANN sales for 2013 and then the Number ( Key actual number of homes) that are non-MLS listed homes for inventory at this current pace

Logan Mohtashami says

Remember the keys phrase is Apples to Apples

I am remembering and you are talking about 2% of the national market place, if that.

Here's the problem with Real Estate today, the same with many investment vehicles.

You are quoting a closed loop of data. When you broaden the picture, like you did with this thread, you can see how ridiculous the data becomes.

I'll get the 2.5 million homes for you, but it is kind of a small point.

David Losh says

I'll get the 2.5 million homes for you, but it is kind of a small point.

You can't get 2.5 million because there are only 1.7 million at most in the shadow inventory. Those aren't rolling out at the same time

I am no fan of the NAR at all, as you might have seen I have taken a lot shots at them and at L. Yun.

However, if I look at all the numbers and I made a presentation to the country and said. There is no inventory crisis in America, I would get a F grade because the biggest source of viable data shows this not to be true.

On sale inventory by the biggest collection of data source has to be respected if you believe in Math.

I can't discount that on sale inventory has fallen dramatically since 2010.

I almost have your 2.5 million units, but in my Google search I found this NAR site amusing: this is the research page:

http://www.realtor.org/research-and-statistics

Did you say shadow inventory? What the heck is that?

Just kidding, because that is another contrived set of data.

NAR is worthless,

Also, you can't find 2.5 million homes that are on sale inventory that isn't part of the MLS.

That would mean there are more homes not listed on MLS than they are listed on MLS

I was just trying to make a point. Here take a look at the numbers for the start of the year and the trend right now is only 8.5% rise from the start of the year

Ready?

1/18/13 Bloomberg) Housing starts in the U.S. climbed 12.1 percent last month to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists

10/21/12 U.S. home construction rose 15% in September to an annual rate of 872,000

3/23/12 U.S. Existing home sales fell 0.9% from February.
2/9/12 A $25 billion settlement with the U.S. mortgage lenders was hailed by government officials as long-overdue relief for victims of foreclosure abuses. Of the five major lenders, Bank of America will pay the most to borrowers: nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion, Citigroup about $1.8 billion and Ally Financial $200 million. The banks will also pay state and federal governments about $5.5 billion.

-- About 11 million households are underwater.

I gave you the foreclosure sales, I also found REIT, and investors sales, but seriously what is the point?

Every one of those underwater loans may want to sell, I for sure want to sell, and get a nice apartment some place warm.

Stick a fork in it, residential housing is simply a matter of who can get what for the cheapest price.

Residential housing is like buying, or renting a car, except we can build something better on your lot when you're done using up the old place.

Brother I tried to explain it as simply as I could, obviously it didn't work.

Math is math, the rest is story telling.

There is no housing inventory problem. This is the same game they tried for about two years, from about 2007 when the market collapsed, until the end of the "First time home buyers tax credit" Around late 2009 to early 2010.

The inventory is being manipulated, either by keeping houses off the market, or releasing them as a house sales. The other thing they do to manipulate "average listing price" is they will include Commercial buildings, and MFUs in the average list price. That will make a neighborhood of 900sqft houses that are selling for 69K and listing for 90K, seem like the average list price is 225K. By time they include the 800K and 1.2 million dollar apartment buildings.

Trulia and Zillow, pulled that in my neighborhood, for most of last year. Where my neighborhood, was dark red or orange, while more typical expensive neighborhoods, that surround my neighborhood, were yellow in comparison.
Those suspect buildings commingled into the listing finally sold earlier this year, and now my neighborhood is in the light green.

It's all just a numbers game, stick to your guns, and don't believe the hype.

CaptainShuddup says

The inventory is being manipulated, either by keeping houses off the market, or releasing them as a house sales

You can make a great case that FASB 157 and the nationalizing of the GSE has prevented homes from coming back to market in a timely fashion.

That I would agree as the number show we have 5.1 Million loans that are either in foreclosure process or delinquency. However, on sale inventory on a national level is low.

Do, I think this is a good thing, not at all. However, I can't say with a straight face that on sale inventory isn't low with this

In fact I made a case that last year that we should let the zombie homes die or make the process faster. The judicial process is taking way too long for homes to come to market

http://loganmohtashami.com/2012/03/09/housing-zombies-last-stand/

Logan Mohtashami says

That would mean there are more homes not listed on MLS than they are listed on MLS

You mean this chart:

http://www.economagic.com/em-cgi/data.exe/cenc25/fsalmon01

As compared to new home sales:

http://www.economagic.com/cenc25.htm#US

Sales are the market place, and sales have been steady.

We have an unlimited capacity to add inventory. Builders are still building, and giving us alternative choices.

In the mean time all of those 100 year old crap shacks are obsolete.

I found your 2.5 million homes in the construction pipeline, so where is the shortage?

There is also all of that investor activity that is coming to a close. To me it looks like we are heading for another glut in housing.

robertoaribas says

this is a hilarious quote!

My kids are in high school, and we moved here to be within walking distance.

Give it up professor, this is the last time.

David Losh says

I found your 2.5 million homes in the construction pipeline, so where is the shortage?

Seriously, now we went from on sale inventory to pipeline construction. I am telling you as best as I can this isn't worth your time to argue. Take a look at housing starts dating back to 1959 when it first was being calculated. We just had the worst 4 year period in construction ever on record

We need to get to 1.4 million avg on housing starts. We are barely at 1 million now. Just look at the census data, the last 4 years on starts have been weak even though the number is getting better. So, for 2013... inventory is low.

Logan Mohtashami says

We just had the worst 4 year period in construction ever on record

True, because builders ignored apartment construction for about ten years. Apartments are an alternative choice in housing.

You can however see the trend line. That bump in the red line means we seriously over built.

I'm actually not arguing with you, I have enjoyed your input. You may be right, I may be wrong, it's happened before.

What I know is that we have a ton of housing here in Seattle. I saw more units created in city in ten years than I have in a life time, and they are still building, in city.

In our surrounding areas, forget about it. There are thousands if not millions of homes, built, and our city responded by building Light Rail.

I don't think you can find anything like this historically.

What is telling about housing starts is the multi family aspect of it.

Logan Mohtashami says

We need to get to 1.4 million avg on housing starts.

That is the quote for getting a healthy economy. Each housing unit creates jobs, and pays tax revenue.

Do we really need those housing units?

Again, your thread shows a manipulated Real Estate market place. The Fed, and our government want housing to bolster unemployment, while giving us projected tax revenue.

So, is this actually a bubble, or pure manipulation?

Logan Mohtashami says

What is telling about housing starts is the multi family aspect of it.

Does that include row houses?

It's the multiplier effect of housing the FED likes. This is why they want housing to spring back.

However, if income growth is weak, there is a limit long term to expansion. However, we clearly saw a bottom in new home sales and existing home sales have hit a bottom as well.

Years from now when rates are higher we shall see how many homes can be bought ( X cash buyers)

The number I am always looking at is Cash buyers to first time home buyers. Right now it's 30% /30% that number needs to get better for the first time home buyers and as well all know that hasn't happened yet

David Losh says

Does that include row houses?

All new SFR and Multi family construction

Logan Mohtashami says

All new SFR and Multi family construction

Yeah, that also means condos, but not so much for apartment building.

It's also interesting that today the Fed's Saint Louis President is talking cutting Quantitative Easing:

http://www.cnbc.com/id/100626267

and this money management fund is asking for the Fed to reign in the Easing:

http://www.cnbc.com/id/100625847?__source=xfinity|mod&par=xfinity

In the same day builder stocks are soaring.

I have an idea that we are on our way to the recovery of a normal financial market place.

What that means to me is that these builders, speculators, and hedge fund investors have a chance right now to cash out, and get well, financially.

If we get the builders out of the mess they made, we have a chance to have affordable housing, that makes sense to the middle class.

I would see slow steady growth rather than big bogus profits as the rule in the next five years.

robertoaribas says

Not

you have nothing to say professor

David Losh says

We can fix MediCare, and MedicAid by fixing our Health Care system. That's a long debate, but there are solutions to Health Care that we are tinkering with now.

Yes, we are paying 30+% more per capita than comparable countries, including those where the aged are a higher percentage of the population than ours (Japan, Western Europe). There is plenty of room for increased efficiency. Getting rid of marketing and sales costs by nationalizing health care would be the best way to go. Lots of money paid in commissions and spent on advertising.Logan Mohtashami says

The reason we will have a net interest payment problem is because S.S. and Medicare cost so much. Medicare cost are insane looking out long term. Also, this has to do with our demographics problem.

It's because the surplus was spent on the military and subsidies for corporations for decades, because in the 80s neither Reagan nor the Dem Congress wanted to raise taxes to pay for the burst of new defense spending. Had that money not been spent, there would be little to no problem.

We'll just have to eliminate subsidies, raise taxes on businesses and the top 1% (which are at post WW2 record lows), and cut "defense" (actually, power projection) 75%.

thunderlips11 says

Had that money not been spent, there would be little to no problem.

You're looking backwards. The reason our deficit is going to blow up is because our demographic profile is about to take a massive shift upward and collection on S.S. and Medicare are going to explode. Years ( 2022 and out)

More old people in the system more shelling out of money and our worker to payout ratio doesn't look great

Logan Mohtashami says

You're looking backwards.

Yes, because we have to understand the problem. Wall St. wants people to think the system was "always doomed", when it worked fine for 3 generations without a hitch, and indeed produced massive surpluses for decades.

We have to understand we need to reverse what happened over the last 30 years. Social Security and Medicare Surpluses were used to pay for then-current spending, mostly defense and tax cuts. To fix the problem, we have to run in reverse and use current spending - by cutting defense and raising taxes - to refund social security.

In other words, instead of SS being spent in the general fund, the general fund must now support Social Security.

I'm not worried about it. Old People vote reliably, and there are too many boomers who worked their whole lives and know that SS is the only thing keeping them off welfare. In a battle between the AARP and Northup-Grumman for spending, the AARP will win. There are just too many politicians who need the elderly vote to win.

No problem raising taxes - there is too much money chasing too few opportunities, because there is no growth in real incomes to create new opportunities. That extra tax money, had it remained in private hands, would have just gone to encourage deficit spending or start yet another bubble.

thunderlips11 says

when it worked fine for 3 generations without a hitch, and indeed produced massive surpluses for decades.

I am not explaining it right, this was NEVER going to workout in the long run. Our unfunded liabilities on Social Security and Medicare was always awful. It's just our bill is due years from now.

Now if we grew at 4-5% GDP then we can debate if it's sustainable

However, because of

1. Globalization
2. Technology
3. Debt
4. Demographics

Our capacity growth is limited to a 2-3% GDP country at best for this century. So not only is our payout ratio bad our estimated GDP growth isn't that great either.

This is why every single budget looking at after 2022 looks awful. We simply don't have the growth to match the mandatory payouts. We are getting older and more obese.

The funny thing about the budget is that no one disagrees that things look awful after years 2022, it's just too far away to do anything about it politically.

A better way to explain unfunded liabilities

"The U.S. government is obligated under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The Government Accountability Office (GAO) projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and social security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing. The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have had to be set aside in 2009 in order to pay for the unfunded obligations which, under current law, will have to be raised by the government in the future. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times more funding than Social Security. Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion. However, these unfunded obligations are not counted in the national debt."

At some point in the future this country will have a discussion if the US people want all it's revenue going to Social Security, Medicare and net interest payments. At this stage the conversation isn't that important because it's still 13-18 years away.

Logan Mohtashami says

I am not explaining it right, this was NEVER going to workout in the long run. Our unfunded liabilities on Social Security and Medicare was always awful. It's just our bill is due years from now.

That simply isn't the case. Like I said, had we not spent the surplus when the population was overwhelmingly working age (1965-2005), there would have been little to no problem. The worker:retiree thing is a red herring, since almost everybody who reaches SS age paid a lifetime of SS withholdings, and the economy grew over those decades. Many people never collect SS, and some get it for a very short period of time. SS is basically pooled risk, a pretty much like a fixed annuity.

Not all wage income pays into S.S. and M.C. Remove that artificial cap, and require all salaries to be subject to withholding, and much of the problem disappears, even with the looting.

And, taxes are at post WW2 lows. If our taxes were at all time highs, AND if the S.S/MC surpluses hadn't been spent, there might be a case that S.S. is unsustainable.

Let's compare Soc Sec to the General Budget. Which one has been running a deficit for the past few decades and which has been solvent since the moment it was created?

SS projections are an accounting trick, like the USPS going bankrupt, but only because they are forced to pre-fund the retirements of people they haven't even hired yet. Nobody in the private or any other public sector does 75-year projections. And the idea that nothing will change in 75-years is absurd.

thunderlips11 says

If our taxes were at all time highs

Good luck on getting any party to raise taxes on middle class. I agree that taxes need to go up, but both parties are in fantasy land on taxes.

With Clinton tax rates, Marginal rate increase on the middle class brings 3 times more revenue than that taxing the rich.
Raising taxes on the rich brings only 800- 837 Billion over 10 years ( White House Numbers) next 10 years

Where raising it on the middle class is roughly 2.4-2.7 Trillion next 10 years

So you need to raise taxes on the middle class and both parties won't go there.

See, the problem is that both parties are addicted to Bush Tax Rates for the middle class

http://loganmohtashami.com/2012/12/30/fiscal-bluff-shows-addiction-to-bush-tax-cuts/

Logan Mohtashami says

Good luck on getting any party to raise taxes on middle class.

Don't need to.

Logan Mohtashami says

Raising taxes on the rich brings only 800- 837 Billion over 10 years ( White House Numbers) next 10 years

I don't know what this means. Is this income taxes? Eliminating loopholes? Capital Gains taxes?

The top 1% own 90% of the wealth, and 80% of the income. It's impossible that taxing the middle class - if the taxes are levied as a percentage of income - would produce more revenue than increasing the taxes on the wealthy.

I suspect Obama, the good neoliberal Democrat that he is, was not intending to raise capital gains taxes or eliminate the plethora of new loopholes since Clinton, but simply raise the marginal rate.

thunderlips11 says

The top 1% own 90% of the wealth, and 80% of the income. It's impossible that taxing the middle class - if the tax is a percentage of income - would produce more revenue than taxing the wealthy.

Not even close. See marginal tax rates go based on income. So, when you raise taxes on the marginal side for incomes above $250,000 that is only for incomes after that 250,000 level.

So, if you made $251,000 your income of only 1,000 gets taxed at a higher rate.

Most people don't know that even today on the marginal tax side.

I am all for tax reform and killing a lot of deductions. However, the revenue is in the middle class tax rate because majority of the income base is from that $250,000 level and below.

We simply don't have enough rich people to tax. I believe the last number I saw is that if you taxed the rich 100% it will provide 121 days of funding and that's it.

You want more revenue you need to get tax reform and the middle class has to pay more taxes period.