patrick.net

The easiest way to get rich in the next few years........Homebuilder stocks.

Or short them

The US has stopped subsidizing houses, unless you are in the upper 1percent.

Simple as that.

The housing recovery in one chart
Since Dec 2007
1-unit homes: -35%
2+ unit homes: +23%

http://www.wsj.com/article_email/u-s-housing-starts-rose-9-8-in-june-1437136432-lMyQjAxMTA1ODEyNzMxMzcxWj

It is not possible to conceptualy understand the situation through graphs.

Relax my dear skeptical friends. Housing is gathering steam. Greater the steam building, the greater will be the thrust.

The US is certainly still subsidizing housing for many.
I'm not anywhere near the top 1%, but get a nice tax deduction on interest payments.
For the lower income, section 8 is providing a place to live for the poor and welfare for landlords.
There is also an implicit subsidy in the low interest rate provided for borrowers, and it is huge.

I'd say that housing welfare payments are strong at the moment. The only people who are squeezed a bit are the borrowers who make too much for section 8, but not enough to get a benefit from itemizing deductions. But they still get a benefit on the interest rate, and their benefit (assuming they have lower credit scores) is probably much higher than the benefit given to the wealthier borrowers.

Logan Mohtashami says

My forecast by 2017:
OC median prices will be $850,000 some time in 2017.
Home construction will sky rocket by 2017.
The home builder index "ITB" will triple by 2017.
Unemployment will continue to drop.
The Dow will hit 25,000.
Mortgage rates will still be below 5%.
and one more.....Dan, Call Crazy and SBH will go on a cruise together and have a great time. Upon return, they will continue with their attacks.

Strategist says

The home builder index "ITB" will triple by 2017.

Remember with the builders, as long as traditional supply is lower than 6 months on a starting year basis they have some pricing power leverage. Once the supply turns over then they are directly competing with cheaper existing homes.

So, to their benefit they're pushing up their rental plans even more this year, now this one month number might be boosted by the multifamily tax credit ending. However, they have stuck with their renting theme discipline which has helped them out well this cycle

Logan Mohtashami says

Nice chart.
There should be a proposition mandating that permits be granted in proportion of population increase.

Heraclitusstudent says

Nice chart.

There should be a proposition mandating that permits be granted in proportion of population increase.

Here is the starts as a % of the population

Logan Mohtashami says

Strategist says

The home builder index "ITB" will triple by 2017.

Remember with the builders, as long as traditional supply is lower than 6 months on a starting year basis they have some pricing power leverage. Once the supply turns over then they are directly competing with cheaper existing homes.

If the cheaper, existing homes take a 35% price jump in the next two years, builders should do well.
Oh, and to add to my forecast list above.....The most important......mortgage loans will be easier to obtain. :)

Strategist says

If the cheaper, existing homes take a 35% price jump in the next two years, builders should do well.

35% in 2 years... Hmmm.... 6:44 wine drinking already ;-)

Strategist says

If the cheaper, existing homes take a 35% price jump in the next two years, builders should do well.

Oh, and to add to my forecast list above.....The most important......mortgage loans will be easier to obtain. :)

Oops...another forecast. With an improving economy, come November 2016, Hillary will say "8 years ago the economy was going to hell because of the Republicans. Now, it's doing awesome because of the democrats. Vote for me"
And they will.

Strategist says

Oh, and to add to my forecast list above.....The most important......mortgage loans will be easier to obtain. :)

They just brought back Interest Only Loans from the 2nd biggest portfolio lender in America

Logan Mohtashami says

Strategist says

Oh, and to add to my forecast list above.....The most important......mortgage loans will be easier to obtain. :)

They just brought back Interest Only Loans from the 2nd biggest portfolio lender in America

It's a start. Lenders and politicians will be bolder with foreclosures dropping like a rock. The last 8 years saw cash buyers, ultra tight lending, and lots of low rate 15 year loans, where equity rapidly builds up. These are very strong housing fundamentals.

Strategist says

It's a start.

except they qualify you on a 20 year amortization with a 2% above note rate to make sure you're not buying or refinancing the home just based on the IO payment ;-)

Logan Mohtashami says

The housing recovery in one chart

Since Dec 2007

1-unit homes: -35%

2+ unit homes: +23%

so... rent inflation should cool off eventually, and perhaps rents will dip as vacancy increases with the inevitable oversupply?

landtof says

so... rent inflation should cool off eventually, and perhaps rents will dip as vacancy increases with the inevitable oversupply?

In theory that should happen....We will have some data before hand to get a better view mid 2018-2019 to get an idea on that

Call it Crazy says

THANKS OBAMA!!!!

yep - the democrats war on middle-class suburbia was set in motion: high-density, eco-friendly, ride-share, bike-to-work, live next to differing social classes and races, etc.

puke!!!

Logan Mohtashami says

In theory that should happen....We will have some data before hand to get a better view mid 2018-2019 to get an idea on that

i guess it takes a few years to complete construction and get things filled in.

this is off-topic, but do you have any data on the direction of high-end housing construction? it seems to be pretty stable (at those lofty prices). who will keep these units propped up over the next 10 years?

landtof says

this is off-topic, but do you have any data on the direction of high-end housing construction? it seems to be pretty stable (at those lofty prices).

Trend is your friend, build bigger homes for more wealthy home buyers

Now homes over a $1,000,000 if you take top 20 cities in America total sales are less than 5,000, so that market is very small

landtof says

but do you have any data on the direction of high-end housing construction?

Here are 2 charts for you as well on that

https://research.stlouisfed.org/fred2/graph/?g=1crK

https://research.stlouisfed.org/fred2/graph/?g=1crM

thanks.

Hey Logan, Why are you up at 5.30am on a Sunday? Go back to bed.

Go to school kids! :-)

Strategist says

Hey Logan, Why are you up at 5.30am on a Sunday? Go back to bed.

I am up at 4:00 - 5:00 every day which makes Hawaiian vacation very interesting!

This is where my starts have legs theory has the right back drop.

However, as you can see why this has been the worst housing recovery ever recorded post WWII