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1   _   2015 Nov 24, 6:22am  

Even if the last 2 months of the year coming weaker than expected we should still end the year between 5.18 - 5.32 million

A key factor this year and why the Grade was a B is that we had growing mortgage buyers and falling cash buyers, cash buyers are still historically high, 15% above historical norms, the fact that they're falling to me is still a positive as the market starts to go back to it's normal home buying %.

We should see some monthly 2016 sales print out a teenager # for monthly sales from cash buyers which would be the first time in this cycle that has happened

2   Strategist   2015 Nov 24, 9:00am  

Logan Mohtashami says

Even if the last 2 months of the year coming weaker than expected we should still end the year between 5.18 - 5.32 million

A graph that plots new home sales vs how many are needed to serve a rising and migrating population would be cool. Especially if it can be broken down by region. That would be a key variable in determining future home prices. I'm gonna try and search one out, but see if you can too. From what I'm seeing, spring 2016 is likely to be a whole new phase of price increases.

3   _   2015 Nov 24, 11:25am  

Strategist says

A graph that plots new home sales vs how many are needed to serve a rising and migrating population would be cool

This is for existing homes not new homes, I will have a new home grade report after the next new home sales report.

My grade will be slightly higher because unlike every other housing analyst I didn't have a 24%-41% sales growth number making 2015 the 3 straight year of missed sales estimates.

Median new home sale prices are flat this year, that is more due to the make up shift of sales. It doesn't take much when it's only 500K sales

4   _   2015 Nov 25, 7:09am  

Strategist says

A graph that plots new home sales

I might need another month in sales data to write report on new home sales, revisions were badly negative in today's report and we had a miss on headline which most likely means that number will be negative revised

5   _   2015 Nov 25, 7:12am  

Median sale price of new homes sold was $281,500 – down from $307,800 in Sept. Lowest in over a year!

I don't see the price decline as a big deal as make shift in sales is a big factor with such low levels of total sales

6   _   2015 Nov 25, 7:33am  

I wouldn't read too much here

7   _   2015 Nov 25, 7:56am  

Strategist says

A graph that plots new home sales vs how many are needed to serve a rising and migrating population

I would use this to make your bullish point in term demographic demand curve

8   Strategist   2015 Nov 25, 8:32am  

Logan Mohtashami says

I wouldn't read too much here

I fully agree.

Logan Mohtashami says

I would use this to make your bullish point in term demographic demand curve

It partially meets what I was looking for.
Here's what I'm looking for. Graphs showing the shortage/surplus of new homes built, annual and cumulative, US and regional. I am willing to bet that would be a crystal ball for future home prices in today's scenario. The crystal ball would be even more crystal clear by adding other variables like unemployment. These graphs may not be around and would have to be made from scratch. I have forgotten most of the stuff from my classes, but a simplified version should be possible to make with the right data.
The hypothesis is: A lack of home building is the primary cause of home prices and rent increase in certain regions, in todays scenario.

9   _   2015 Nov 25, 8:43am  

Strategist says

Here's what I'm looking for. Graphs showing the shortage/surplus of new homes built, annual and cumulative,

I would suggest incorporating rental vacancies charts then because a lot the demand curve getting better years 2020-2024 is based on the massive rental cycle we are having turning over to buyers to a degree in those years

10   Strategist   2015 Nov 25, 8:46am  

Logan Mohtashami says

Strategist says

Here's what I'm looking for. Graphs showing the shortage/surplus of new homes built, annual and cumulative,

I would suggest incorporating rental vacancies charts then because a lot the demand curve getting better years 2020-2024 is based on the massive rental cycle we are having turning over to buyers to a degree in those years

Yes. I'm gonna start searching for data.

11   _   2015 Nov 25, 8:57am  

12   Strategist   2015 Nov 25, 9:16am  

Ironman says

Strategist says

The hypothesis is: A lack of home building is the primary cause of home prices and rent increase in certain regions, in todays scenario.

Do you really believe that, except in a very FEW specialized regions?

Do you think that's what's going on Nationally?

Yes. Nationally and regionally, in varying degrees. The right graphs would give a very clear picture for the next 5 to 10 years.

13   _   2015 Nov 25, 12:09pm  

Ironman says

Do you really believe that, except in a very FEW specialized regions?

Do you think that's what's going on Nationally?

The market place has been talking since the year 2000 as the builders are only really building out bigger homes to make their profit margins

Hence why I have been cautious on TOL for a few years, other builders much better suited

14   _   2015 Nov 25, 12:12pm  

I really wanted to write a Report Card on New homes because I brought up the negative decelerating trends through revisions months ago, but this report revisions was worse than I thought so I might have to wait for one more report

New Home Sales Need A Strong Total Report

http://loganmohtashami.com/2015/08/19/new-home-sales-need-a-strong-total-report/

New Home Sales Miss Was Forecast Months Ago

http://loganmohtashami.com/2015/10/26/new-home-sales-miss-was-forecast-months-ago/

We are still going to get year over year but this is again the 3rd year in a row of missed sales expectation and this is with the lowest late cycle year over year bar I have ever seen in my life

15   anonymous   2015 Nov 26, 7:10am  

they don't seem to need a great number of sales when their product is priced so high. everybody loves a $2M estate home. no wait, a "custom" is even better.

16   _   2015 Nov 26, 7:44am  

landtof says

they don't seem to need a great number of sales when their product is priced so high. everybody loves a $2M estate home. no wait, a "custom" is even better.

In this cycle higher home price sales have tilted the median price higher since the total volumes for years have been very low

17   mell   2015 Nov 26, 9:27am  

Median prices have fallen MoM and there is some inventory pressure now in the high-end market in the bay area while lower and middle-end is still somewhat desired because people cannot afford more. This will start to deflate in 2016. While many may be looking for a crash which may not come a slow decline is more difficult to grasp and acknowledge.

18   _   2015 Nov 26, 1:14pm  

For national home prices for existing homes only not new homes.

It still has legs, inventory still to low for price declines, conventional to distress sales is growing, no recessionary economics in terms of job loss out there yet.

19   mell   2015 Nov 26, 1:26pm  

Logan Mohtashami says

For national home prices for existing homes only not new homes.

It still has legs, inventory still to low for price declines, conventional to distress sales is growing, no recessionary economics in terms of job loss out there yet.

Prices in the bay area were driven up by very low inventory and ZIRP so that the few tech riches get dibs, followed by the double-income earners who barely can afford their mortgage at those low rates, depending on staying employed at all times. But the majority of jobs created were low income jobs and these people simply cannot buy. When foreigners and techies/wall street stop buying, there is nobody to take their place. Let's see how inventory will be trending going forward.

20   _   2015 Nov 26, 1:29pm  

mell says

Prices in the bay area were driven up by very low inventory and ZIRP

That is a different set of variables than

mell says

For national home prices for existing homes only not new homes.

National home prices decline needs more inventory, new distress homes and recessionary trend economics to bring it down

21   _   2015 Nov 26, 2:14pm  

Now everyone go eat some good food!

It's Thanksgiving :-)

22   Tenpoundbass   2015 Nov 26, 2:31pm  

No wonder every one you see is a stressed out of their minds powder keg.

They are only making 52K a year for combined household income and they are splurging on $290K median home prices.
I make double that, and I wouldn't dare take on more than $175K. Not when all of the other variables are ignored and the FED claims there is no inflation.

Now they say you should spend only 35% of your income on housing. I wouldn't ever spend over 25%.

23   _   2015 Nov 26, 2:35pm  

Tenpoundbass says

They are only making 52K a year for combined household income and they are slurging on $290K meidan home prices

I believe the household median income is 66K a year

New homes are only 1/10th of sales, however, economic output is the most important factor due to construction jobs, big ticket item purchases , etc etc .

Since a good portion of the homes sold are much bigger than the median I would venture to say that we are talking about more than 100K household incomes buyers here

For new homes, which is a factor why the sales demand curve has been light in this cycle since it's a 90% mortgage market based sales sector

24   Tenpoundbass   2015 Nov 26, 2:55pm  

I was put through the ringer with my income back in 2010, I felt like if I made one penny less the whole deal would have been off, when I was closing and working with the loan officers.
I went from solid brown hair to salt-n-pepper litterally during that 45 day closing period.

25   _   2015 Nov 26, 2:58pm  

Tenpoundbass says

I went from solid brown hair to salt-n-pepper litterally during that 45 day closing period.

marriage did that to me :-)

26   _   2015 Nov 26, 3:44pm  

Ironman says

I'm so tired of hearing the "low inventory" chant causing prices to rise. It's total bullshit. There is 5.2 MONTHS supply, which is PLENTY of houses. Period.

That is very true for sales demand, yes.. but for price declines, it's not enough

In fact we have more annual inventory now than any period from 1999-2005 but missing roughly 1.5 million mortgage buyers a year in this cycle

27   _   2015 Nov 26, 3:46pm  

On the rate aspect, rates have been falling for 34 years

If we pull back starting from 1900

Majority of the economic life cycle has had low rates

28   mell   2015 Nov 26, 4:08pm  

True but it can't and won't go on like this forever.

29   _   2015 Nov 26, 4:21pm  

mell says

True but it can't and won't go on like this forever.

No it can't but it can stay low for a lot longer than what people think if inflation stays low as well.

Best case for higher rates and higher inflation are years 2020-2024 when demand consumption from a younger workforce creates more inflation.

However, big picture, older demographics are deflationary and the world is getting older, America does have a young workforce coming on line but a lot countries in the world are fighting older demographics

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