patrick.net

If you can get 17%-27% growth in purchase applications and cash buyers only fall slightly not the 6% drop we saw in Jan then you can get over possibly 5.10 million in sales which is still very low and below the 5.5 million trend line you usually see with E. Homes sales

So far we haven't seen the growth in purchase applications, even I said we should see 5%-10% growth year over year because we hit a 21st century low last year and match that to employment to population numbers we should have some growth there because the bar is so low

However, so far it's been flat to slightly higher, have about 6 more weeks left for this metric to show what spring demand is

tatupu70 says

There's really 1 net new buyer in each case but there is 400% high sales volume in the second case.

Wow

Brother this equation is for you then

lim f(x)=sky
x-a

tatupu70 says

Like I said earlier--I don't care about sales volume

We just work from different worlds then, because I have to use all variable factors for housing.

I can't be a just a price guy. I remember all the price people back in 2003-2006 and a lot of the same people those who are left are saying the same
thing from 2012-2015

However this cycle is unique all the demand is real, the owners do have the capacity to own the home. The cash driver is the biggest variable factor because it amounts to 1 million home sales for E. Homes

New home sector has a much bigger economic impact so that is always considered more important than existing homes especially now people aren't cashing out on their homes to consume on debt

Logan Mohtashami says

We just work from different worlds then, because I have to use all variable factors for housing.

That's not really true. You use the variables that you think are important--there are unlimited variable factors. Clearly you don't use them all. I'm just pointing out that some of them are less important than you think.

Think about this--why does anyone care about sales volume?

tatupu70 says

Think about this--why does anyone care about sales volume?

Here is an example just now

The #housing recovery is faltering...construction and new home sales remain weak. S&P's Blitzer

I understand why people like yourself don't like math, data and facts. I totally understand why in your mind there is nothing wrong with the housing market.
All that matters is price. I remember 2003-2006 very well and the similar wording of housing

However, when everyone else, The Fed, Economist , Warren Buffet and many others are concerned about the lack of growth demand.. just maybe .. maybe there is something to
Math
Facts
Data

It doesn't matter, none of this data matters to that group that just car about price, I have no doubt

I totally understand why you don't see anything wrong with the housing market... ;-)

Just look a longer term trend

This is what I wrote back in Dec 2010

Consequences of an unstable market.

The longer term consequences of an unstable residential real estate market may be more serious than just the destruction of individual wealth. The ideal of middle class home ownership may be at stake. The census bureau reported a 7% decline in national rental vacancy rates in 2010, along with an overall decline 0.7% in home ownership rates compared to a year ago. There were fewer “organic” buyers, more renters and more investment buyers in the market in 2010 and I expect this trend to continue into 2011. Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners?

Logan Mohtashami says

I understand why people like yourself don't like math, data and facts. I totally understand why in your mind there is nothing wrong with the housing market.

All that matters is price. I remember 2003-2006 very well and the similar wording of housing

However, when everyone else, The Fed, Economist , Warren Buffet and many others are concerned about the lack of growth demand.. just maybe .. maybe there is something to

Math

Facts

Data

Logan--enough with this nonsense. I love math. I love data. I love facts.

But I'm smart enough to be able sift through mountains of data and facts and understand which ones actually are telling me something useful. You don't seem to be able to do that. The point of all the data and facts is to PREDICT something in the future. You don't seem to get this. You think that making a bunch of lines in different colors makes you look smart....

Maybe it does to someone who is easily impressed. But I want to see data that correlates with something over a decent time period.

Logan Mohtashami says

I totally understand why you don't see anything wrong with the housing market... ;-)

Again--so how does this chart predict rising prices from 2012-1015?

Logan Mohtashami says

Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners?

Yes. That also explains why median home price increase can outpace median income rise: if only the top 1/4 of the population is buying houses, the median of the top 1/4 may well be experiencing faster median income increase than the general population, thanks to Obama administration government intervention policies exacerbating income and wealth inequality.

tatupu70 says

Again--so how does this chart predict rising prices from 2012-1015?

Great example right here. You don't care about anything but price, even when sales turn negative in a year where we should have seen 20%-30% growth

However just look when the first level of deviation rise and that was with near 1 million new homes sold

Right here it's a perfect reflection of the market place but you can't see it because you're stuck on only one variable price

Look at 2003-2006 and what happened to prices then?

Now you don't even have 1 million homes sold like we did in 2006 you're hitting a soft patch at 440K with rates at 4%

Now new homes are the most expensive on record? This was the main reason why sales were negative

They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down

That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market

Purity of mathematics creates this divide!

Kudos, on this one, this is the best example you have given me

tatupu70 says

You think that making a bunch of lines in different colors makes you look smart.

Numbers can't lie

People, poets, politicians these are lies

Numbers are the closest thing we have to the handwriting of God ;-)

tatupu70 says

Logan--enough with this nonsense. I love math. I love data. I love facts.

If you truly did love numbers then you would see why there is an issue with the housing market
You can't deviate from the economic equilibrium of your surrounding group of demand drivers

When condo purchases in the data pool are replaced by apartment building purchases, the average and median transaction prices can increase even without any quality improvement in the housing stock being transacted. Yes, transaction unit volume drops in that product mix change.

tatupu70 says

Again--so how does this chart predict rising prices from 2012-1015?

See, the best thing here is that we both agree home prices are going to rise

But I see net demand issues happening where it's not on your radar really

That is what makes a market place, that is completely fine.

Logan Mohtashami says

The longer term consequences of an unstable residential real estate market may be more serious than just the destruction of individual wealth. The ideal of middle class home ownership may be at stake. The census bureau reported a 7% decline in national rental vacancy rates in 2010, along with an overall decline 0.7% in home ownership rates compared to a year ago. There were fewer “organic” buyers, more renters and more investment buyers in the market in 2010 and I expect this trend to continue into 2011. Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners?

That IMO is on the mark. IMO the overarching reason is simply off-shoring of jobs, secondly it is because of demographics, thirdly it is because of mercantilism, fourthly it is because of automation.

But the insidious reason that may have more to do with than anything is the Fed preventing an organic recovery by TARP and QEs and the Greenspan put which is seen in the velocity of money being at an all time low.

Logan Mohtashami says

Great example right here. You don't care about anything but price, even when sales turn negative in a year where we should have seen 20%-30% growth

Again-why should anyone care about volume if it's not a leading indicator on price? And who says what we "should" have seen?

Logan Mohtashami says

They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down

That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market

Purity of mathematics creates this divide!

Kudos, on this one, this is the best example you have given me

No problem. I think you'll find 99%+ of the people who follow the housing market are concerned with price. So, yes, that's the variable that I consider the most important. Other variables are tracked and reported because there is a belief that those variables will affect price in the future.

Logan Mohtashami says

They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down

That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market

Please don't characterize my views on the housing market. I think there are a lot of things wrong right now--and the housing market just reflects the broader issues with the US economy. But the point I'm making is that most of your charts show an overpriced market in 2012. Yet, prices went up for 3 straight years. Obviously those charts are not good predictors of future market behavior.

Facts are neutral--it's the interpretation of those facts that is the important thing. You haven't shown an ability to interpret facts and data to make good predictions on the future. If you can't do that it doesn't matter how many graphs and charts you can make or how many colors you use on them. They're worthless.

Logan Mohtashami says

Numbers can't lie

People, poets, politicians these are lies

Numbers are the closest thing we have to the handwriting of God ;-)

Yep--but you aren't just posting the raw data. You are making graphs that are reaching conclusions. I don't fault your numbers. Just your interpretations.

Logan Mohtashami says

If you truly did love numbers then you would see why there is an issue with the housing market

You can't deviate from the economic equilibrium of your surrounding group of demand drivers

You never answered my question. You say we can't deviate from the equilibrium but we have for 3 years running.

And I ask--at what point do you reevaluate your theories? How many years of them not reflecting reality before you begin to question them?

tatupu70 says

Yep--but you aren't just posting the raw data. You are making graphs that are reaching conclusions. I don't fault your numbers. Just your interpretations.

Like I have said over and over again

You can't help yourself, in your mind there is nothing wrong with the housing market. I get it I have come to realization that there are a certain group of humans that
Math, Facts and Data don't matter. Even Janet Yellen just talked about the Sluggish Housing market but in your mind math, data and facts don't matter

tatupu70 says

You never answered my question. You say we can't deviate from the equilibrium but we have for 3 years running.

Again I have given you the same mathematical model to show you why home prices are rising and you don't even remember it

You don't care about math, facts and data and even with the mathematical model to show you why home prices are rising you have already forgotten it. It was written above.

tatupu70 says

And I ask--at what point do you reevaluate your theories?

Trend data is monthly and always has to be looked at. None of this matters to someone like yourself because

Tatupu70 doesn't believe there is anything wrong with the U.S housing market something that everyone else agrees that there is a demand problem

It's what we called economic narcissism, even when all the data shows a demand issue a single person can create a theory that there is nothing wrong with the housing market.

This almost borderlines of economic moral insanity

Which is 100% normal because I have seen this type of human behavior before where math, facts and data don't matter to this certain group

Remember if cash buyers went back to their normal historic %
Both 2012, 2013, 2014 and most likely 2015 would be the lowest level of total sales in the Great Recession

This is a mathematical fact, your demand drivers are the Rich, they have given a great cushion even though total sales have been soft.

There is no way around it, to deny this is to deny numbers itself. Much like the demand during the housing bubble was fake in this cycle, it's been the Rich buying with cash

None quarter asked none taken, this is the reality of this housing cycle

Once mortgage demand grows then you have a more normal housing market and even these low level of total sales wouldn't matter as much

Here is a stat

Back in 20000

EHS was 5.2 million
We had 5.5 million less people working back then
Interest rates were at 8%

2014

EHS sales closed a 4.93 million
We have 5.5 million more working than the year 2000
Interest rates range was from 4% - 4.5%
And we had a 20% above historical norm of cash buyers in 2014

Even with all that sales came in negative in year 6 of the economic cycle which had the biggest job growth monthly avg since the year 1999 and biggest private monthly
job creation since 1997

Math is Math... the rest is storytellig

Logan Mohtashami says

You can't help yourself, in your mind there is nothing wrong with the housing market. I get it I have come to realization that there are a certain group of humans that

Math, Facts and Data don't matter. Even Janet Yellen just talked about the Sluggish Housing market but in your mind math, data and facts don't matter

Logan-- Why do you keep saying this?? Can you not read my posts? Do you not comprehend them?

Logan Mohtashami says

Again I have given you the same mathematical model to show you why home prices are rising and you don't even remember it

My apologies--please repost it then and explain how it works. What model result indicates rising prices and what result indicates falling prices.

Logan Mohtashami says

Trend data is monthly and always has to be looked at. None of this matters to someone like yourself because

Tatupu70 doesn't believe there is anything wrong with the U.S housing market something that everyone else agrees that there is a demand problem

It's what we called economic narcissism, even when all the data shows a demand issue a single person can create a theory that there is nothing wrong with the housing market.

This almost borderlines of economic moral insanity

Which is 100% normal because I have seen this type of human behavior before where math, facts and data don't matter to this certain group

Logan--

You really need to stop and read my posts and stop pretending that you understand what I'm saying--because you clearly don't. It's not that complicated--I wouldn't think that the nuance is over your head, but perhaps it is.

First off--using sales numbers as a surrogate for demand is only correct with infinite supply. Any other time, it's an approximation that may or may not reflect reality. The fact that you don't understand this simple point is a good indication that your other theories are probably equally suspect.

When have I EVER said that there's nothing wrong with the housing market?? In fact, on this very thread I have posted that there IS something wrong and it is a symptom of the problem with the US economy. So, let's start there. From now on try to read more carefully and understand my position. OK?

tatupu70 says

What model result indicates rising prices and what result indicates falling prices.

6 month inventory levels with trend growth

As long as cash buyers still buy homes you will have at least trend growth, it might not be great but there is no double digit decline in home sales we only say a negative 3% print

I don't believe this will happen in 2015 but lets just say cash buyers go back to their historical norms

That would imply a -13% to -17% Year over Year decline in home sales and even with inventory less than 6 months you would see a decline in home prices
nothing big because it's not a distress market

6 months is the key line for inventory in terms of pricing power, if we started the year at like 8 months with the slowing demand trend then I would say you would see home prices decline year over year

However, we aren't there, so pricing power with on par year over year mortgage demand still gives you enough firepower to keep prices from going up.

This has to be tracked monthly too because of different variable factors that could impact the market place

But for 2015 I am looking for 1%-4% growth in price for existing homes. New home market might see negative trend but for different reasons that would actually be bullish for them that is a entirely different avenue than existing homes because they aren't selling entry levels home

In short
6 month or below inventory with long term trending growth in place gives you pricing power. There is no net new delinquencies being created so the distress market is becoming less and less a factor

That is the short version of it

tatupu70 says

symptom of the problem with the US economy

The U.S. economy is doing better than in previous years, the housing issue is a bigger problem and that has more to do with

#Globalization
#Technology
#Debt
#Demographics

That goes into another topic all together

Logan Mohtashami says

tatupu70 says

What model result indicates rising prices and what result indicates falling prices.

6 month inventory levels with trend growth

LOL You're kidding me. After all this nonsense you are agreeing that supply is the best "model"? What the f$*& are you arguing with me for then?? That's what I've been saying all along.

Logan Mohtashami says

The U.S. economy is doing better than in previous years, the housing issue is a bigger problem and that has more to do with

#Globalization

#Technology

#Debt

#Demographics

That goes into another topic all together

I disagree with the health of the US economy. It does have to do with some of the above, but the poor health is most easily seen by looking at wealth disparity.

tatupu70 says

I disagree with the health of the US economy.

Almost every economic indicator in the U.S. economy is trending better except for housing. I have 10,000 charts to show this.

Now it's a not a Utopia and never will be and the velocity of $ is very poor when so much of it is held by so little but 2014 was clearly a better year than 2013

Logan Mohtashami says

Almost every economic indicator in the U.S. economy is trending better except for housing. I have 10,000 charts to show this.

Less sick doesn't equal healthy in my book.

Even with tight supply we can see that the peak % gains are limited YoY
Still not enough to create a negative trend but there are limits to low inventory gains and why buyer profile matters in terms of total net demand

tatupu70 says

LOL You're kidding me. After all this nonsense you are agreeing that supply is the best "model"? What the f$*& are you arguing with me for then?? That's what I've been saying all along.

Do you see my point exactly, you don't follow data. To be honest it's not your fault, your probably don 't have a financial background so a lot this stuff doesn't make sense to you.

I understand why it's confusing.

This is why you don't provide charts, again what you're saying is exactly what I believe people like yourself think always

Math, data and facts don't matter to you all you care about is price
Just like in 2003-2006 when people told me the same thing, all that matters is price

Logan Mohtashami says

Do you see my point exactly, you don't follow data. To be honest it's not your fault, your probably don 't have financial background so a lot this stuff doesn't make sense to you.

I understand why it's confusing.

This is why you don't provide charts, again what you're saying is exactly what I believe people like yourself think always

Math, data and facts don't matter to you all you care about is price

Just like in 2003-2006 when people told me the same thing, all that matters is price

lol--I can almost guarantee that I have a stronger financial background than you do, but it's irrelevant. You seem to be incapable of discussing the issues without trying to tie it back to me. As I have said repeatedly, your data and facts are useless unless they can be used to explain reality and generate a model for predicting future behavior.

In all seriousness--do you understand that all the data and facts in the world are useless if you can't use them to improve your understanding of the world and allow you to better predict the future?

I did provide facts and data. On inventory. As you have agreed--it's the best indicator of future price. Which is what 99% of the people care about.

You've never answered my question--why should I care about sales volume?

tatupu70 says

lol--I can almost guarantee that I have a stronger financial background than you do, but it's irrelevant.

If that is the case why do you hide behind a fake name?

You know exactly who I am, and economist, professor come to me about housing but you???

Fake name, no data, no economic game.

I have seen this for 15 years and I don't blame you for hiding behind your computer

tatupu70 says

You've never answered my question--why should I care about sales volume?

Because without trend growth even in tight inventory shows the decline in YoY % gains this is why the YoY price gains are decling

At this point you're just embarrassing yourself

tatupu70 says

Which is what 99% of the people care about.

Again why I say people like you don't care about Math, Facts and Data

Everybody, housing pundits, the Fed, Builders, NAR is talking about a net demand problem but only you... care about price

Let me guess during 2003-2006 the housing bubble you didn't care about net demand trends either.

It's the nature of the beast for you to not care about net demand and to this I understand why

Logan Mohtashami says

If that is the case why do you hide behind a fake name?

You know exactly who I am, and economist, professor come to me about housing but you???

Fake name, no data, no economic game.

I have seen this for 15 years and I don't blame you for hiding behind your computer

Would you like to meet in real life? I'm not sure that would accomplish anything, but I'm game.

tatupu70 says

Would you like to meet in real life? I'm not sure that would accomplish anything, but I'm game.

Just say your name, then we can see if you have an economic background like you said

Logan Mohtashami says

Would you like to meet in real life? I'm not sure that would accomplish anything, but I'm game.

Call me 949-291-8293 and I can explain to exactly why the housing pundits, housing economist and other people in the business are coming to me and asking
about the net demand problem, because I have said the same thesis for 6 years now and after 6 years of data the thesis has been vindicated

There is no where for me to hide, because I don't hide behind a fake name, everyone knows who I am