patrick.net

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

Logan Mohtashami says

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

OK--now we're getting somewhere. I'll try to give you a little lesson here, professor. Free of charge. So, the reason you look at sales volume is because you believe that it's a forward looking indicator of future price changes?

Logan Mohtashami says

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

lol--so are prices not data?

Demand is but one part of the equation and history has proven it is less predictive than supply. That is why. Further, as I explained earlier--using sales volume as a surrogate for demand assumes infinite supply. Do you think there is infinite supply right now?

tatupu70 says

OK--now we're getting somewhere. I'll try to give you a little lesson here, professor. Free of charge. So, the reason you look at sales volume is because you believe that it's a forward looking indicator of future price changes?

Why would I listen to someone who doesn't believe in Math, Data and Facts and is only talking about Price

What is your name SIR? if you truly have a financial background we can verify it in less than 1 minute?

Logan Mohtashami says

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

You're awfully defensive for someone who is so certain of their background and knowledge. Typically, I would expect one such as yourself to welcome such questioning of their ideas as it serves to further strengthen their understanding and ensure that they are not off base.

Let me help you out

My name is Logan Mohtashami, google it and you can see what it is out there

If you do have a financial background then spell your name out

So we can google it?

Fair question since you claim you have a financial background

Then exactly I know who I am dealing with so it will help me understand why you're just a price person and why net demand doesn't matter to you

Logan Mohtashami says

Why would I listen to someone who doesn't believe in Math, Data and Facts and is only talking about Price

What is your name SIR? if you truly have a financial background we can verify it in less than 1 minute?

No thanks--I choose not to supply my name. Like I said--there is no need to use the appeal to authority logical fallacy here. Let's let the arguments stand on their own regardless of who is making them.

Price IS data. And it is the ultimate piece of data--all other data is captured to try to understand future price movements.

tatupu70 says

You're awfully defensive for someone who is so certain of their background and knowledge. Typically, I would expect one such as yourself to welcome such questioning of their ideas as it serves to further strengthen their understanding and ensure that they are not off base.

I just want to know who I am dealing with so it can help me understand why you don't care about net total volume sales.
This is a very new economic thesis, I must know who with a financial background is breaking this new thesis

Logan Mohtashami says

I just want to know who I am dealing with so it can help me understand why you don't care about net total volume sales.

This is a very new economic thesis, I must know who with a financial background is breaking this new thesis

I've already told you why I don't find net total volume sales as very compelling. Have you not been paying attention?

I think you may be so ensconced in the details of the housing market that you cannot see the forest for the trees at this point.

tatupu70 says

Price IS data. And it is the ultimate piece of data--all other data is captured to try to understand future price movements.

Let me take this economic thesis.

If this is true then you must believe the market is getting weaker because even in a low inventory cycle we are losing pricing power as inventory has risen from 2012

Correct?

Even from the Master Spin Man himself from the NAR:

Higher prices, coupled with weak supply, caused an unexpectedly large drop in January home sales, down nearly 5 percent from January of 2014, according to the National Association of Realtors.

"This is a notable speed bump," said NAR's chief economist, Lawrence Yun, who deemed the phenomenon, "puzzling," given a stronger economy and rising rents.

I am not puzzled and you're aren't too correct under your own economic thesis about the U.S. housing market?

Right?

Logan Mohtashami says

Let me take this economic thesis.

If this is true then you must believe the market is getting weaker because even in a low inventory cycle we are losing pricing power as inventory has risen from 2012

Correct?

The last article I saw said inventory has decreased in January for the last 2 years. So it appears that while inventory was up for most of 2014, it has now reversed itself and is down YOY, and down even more vs. 2012.

But, yes, history shows that if inventory rises, price changes will decrease.

Logan Mohtashami says

Even from the Master Spin Man himself from the NAR:

Higher prices, coupled with weak supply, caused an unexpectedly large drop in January home sales, down nearly 5 percent from January of 2014, according to the National Association of Realtors.

"This is a notable speed bump," said NAR's chief economist, Lawrence Yun, who deemed the phenomenon, "puzzling," given a stronger economy and rising rents.

I am not puzzled and you're aren't too correct under your own economic thesis about the U.S. housing market?

Right?

No. That quote doesn't contradict anything I've said.

tatupu70 says

The last article I saw said inventory has decreased in January for the last 2 years. So it appears that while inventory was up for most of 2014, it has now reversed itself and is down YOY, and down even more vs. 2012.

The flaw in that thesis is that net inventory is still higher than 2013 where we had more demand for housing.

So there was more demand for housing in a year that saw double digit price gains with less homes in the market but now that TOTAL sales are volume that net demand trend is creating a slow down in price gains which is very normal when you don't have growing sales

Now if you understand what I am saying right there, then you should get it why demand matters ;-)

Logan Mohtashami says

The flaw in that thesis is that net inventory is still higher than 2013 where we had more demand for housing.

So there was more demand for housing in a year that saw double digit price gains with less homes in the market but now that TOTAL sales are volume that net demand trend is creating a slow down in price gains which is very normal when you don't have growing sales

Now if you understand what I am saying right there, then you should get it why demand matters ;-)

OK--so the point of the demand analysis was to predict future prices. Correct?

tatupu70 says

OK--so the point of the demand analysis was to predict future prices. Correct?

That isn't the main factor for the health of a housing market.
Because in all my predictions I am showing YoY price again but I have to believe in a economic discipline that looks at variable factors model

This is the problem when all you care about is price.

Honestly you probably didn't think anything was wrong from 2003-2006 when prices where well beyond the MI2MP model

Be honest here, if I follow your singular housing economic thesis then you were a housing bull all the way through the housing bubble years

Correct?

Logan Mohtashami says

Be honest here, if I follow your singular housing economic thesis then you were a housing bull all the way through the housing bubble years

Correct?

Until right before the bubble popped. Which is really the point, isn't it.. Inventory predicted MUCH more accurately when prices would continue to rise and when they were set to fall.

If you wanted something to measure when we're in a bubble or away from fundamentals--look at price/rent ratios.

tatupu70 says

Until right before the bubble popped. Which is really the point, isn't it.. Inventory predicted MUCH more accurately when prices would continue to rise and when they were set to fall.

EXACTLY!!!!!!! My point :-)

Thank you for your honestly, most people wouldn't admit that

You see in my world the MI2MP model deviated in Mid 2003 and you were a bull all the way to 2006 right before the bubble crashed.

We are in 2 different worlds, I can never advocate the strength of economic sector which doesn't have it's natural demand buyer at or on par with historical trends.

So we are never going to agree on housing economics

However, thank you for your honesty, I total understand now where you're coming from.

Logan Mohtashami says

EXACTLY!!!!!!! My point :-)

Thank you for your honestly, most people wouldn't admit that

You see in my world the MI2MP model deviated in Mid 2003 and you were a bull all the way to 2006 right before the bubble crashed.

We are in 2 different worlds, I can never advocate the strength of economic sector which doesn't have it's natural demand buyer at or on par with historical trends.

So we are never going to agree on housing economics

However, thank you for your honesty, I total understand now where you're coming from.

No problem. In my world, I would be able to predict prices from 2003 - 2006 and from 2012 - 2015 while you wouldn't. And I would also be able to predict the housing collapse much more accurately than you.

I'm not sure what you think is better about your world?

tatupu70 says

I'm not sure what you think is better about your world?

Clap Clap Clap

My first thesis about you was right I just needed confirmation

See

You're that guy that told me in 2003-2006 that all that matters is price, that is the true health of the housing market
You're that guy that didn't care about sub prime loans, option arm loans 80/20 loans because all that matters is price
You're that guy that even today admits that internal net demand doesn't matter all that matters is price

We are in different worlds brother, there is nothing we have in common in how we look at the housing markets

That is what I have been trying to say, you're that guy back then from 2003-2006

Plus if you really did believe in price to rent ratio's you should have been raising red flag in Mid 2003

But you didn't because you're that guy

Math is Math... the rest is story telling

Logan Mohtashami says

You're that guy that told me in 2003-2006 that all that matters is price, that is the true health of the housing market

You're that guy that didn't care about sub prime loans, option arm loans 80/20 loans because all that matters is price

You're that guy that even today admits that internal net demand doesn't matter all that matters is price

We are in different worlds brother, there is nothing we have in common in how we look at the housing markets

That is what I have been trying to say, you're that guy back then from 2003-2006

Plus if you really did believe in price to rent ratio's you should have been raising red flag in Mid 2003

But you didn't because you're that guy

lol--you're way more concerned with "which guy I am" than actually understanding what I'm saying. It's too bad. If you had a slightly better attitude and more open mind, you might just learn something.

Of course I raised the flag in 2003. I lived in CA. and I rented because it was obvious housing prices were drastically overpriced. You are really clueless to what I am saying. Here's a tip for you--no matter how big you think you are--never stop questioning yourself and listening to others.

To say that the housing sector is "unhealthy" because the "demand is weak" doesn't accurately characterize the situation.

Instead you should say:
"Old people are bent on restricting new construction so they can extort insane sums of money from the richest young people in exchange for their shacks. The inventory is deliberately kept low by building much less than population growth would require. Politicians desperately want housing prices to be high, and want young people to pay through the nose, so banks balance sheets look ok. They cannot afford to build more houses and let prices align with wages and building costs, because it would reveal the financial system is rotten to the core."

It doesn't help to say the market is not healthy, when it's deliberately kept this way to produce the desired high prices.

tatupu70 says

You are really clueless

If I am clueless and you just told me you use the price to rent model then why are you debating your own self saying you were a housing bull from 2003-2006

This is what we call economic slippage the story gets in a crossfire you forget what your original thesis.

Honestly do you think this works on someone like me? Do I give that impression that I am real estate agent

tatupu70 says

If you wanted something to measure when we're in a bubble or away from fundamentals--look at price/rent ratios.

So we are in a bubble now?

Logan, I have a question, if you are so smart why do you argue with idiots?

Heraclitusstudent says

tatupu70 says

If you wanted something to measure when we're in a bubble or away from fundamentals--look at price/rent ratios.

So we are in a bubble now?

I don't think price/rent ratios are that out of whack from most of the US. Maybe prices are too high in a few places.

Call it Crazy says

Want to tell me again H.S, who's the whiner??

[shrug] This was just stating facts.

indigenous says

Logan, I have a question, if you are so smart why do you argue with idiots?

You have to know what the other side thinks, it preps you always for any economic discussion

Causation
Correlation
Representation

Math, Facts, Data... the final number is what matters but there is a story behind those numbers ( Why) factor is really what separates economic analysis

Dealing with professors, economist, housing pundits and others. I have learned one thing that they all have in common. None of them have a financial lending background
so their model of affordability is outdated in relationship to this economic cycle. This has been the case for 12 years now and their frustration on why demand has been soft comes from this area of not understanding why Americans aren't buying homes like their model would have shown

Breakdown
MI2MP then add PITI inflation tagged to a DTI factor model, with a representation of LTI metrics against real median income. Once I have shown them this then it makes sense to them why demand is soft even with rates this low

That was the main confusion with the housing community and why they didn't account for the weakness in demand

Logan Mohtashami says

If I am clueless and you just told me you use the price to rent model then why are you debating your own self saying you were a housing bull from 2003-2006

This is what we call economic slippage the story gets in a crossfire you forget what your original thesis.

Honestly do you think this works on someone like me? Do I give that impression that I am real estate agent

Listen--this isn't that hard to understand. I said that inventory is the best predictor of future housing prices. And I think you agree with that statement.

As to a housing bull--my statement was that using inventory as a guide, one would have been a bull until inventory started rising then they would have turned bearish before the bubble popped. As someone who wanted to buy more long term--I wouldn't have been able nor wanted to time the market, so I sat it out. No slippage or difference from my original thesis.

See--this is my problem with you. You can't just state your point without trying to puff yourself up. If you would have simply said that you use other measures to try to gauge demand because supply can change quickly and you wanted a longer term gauge of the direction of housing prices, then you might have had a point. But, for some reason, you cannot do that. After all this, you have yet to give a simple explanation for why you look at sales volume. It's as if you are incapable of understanding and explaining your thought process.

tatupu70 says

See--this is my problem with you. You can't just state your point without trying to puff yourself up

2. Housing internals are weak
Second, those housing pundits tend not to consider the “internals” of the housing market. The internals tell the story for those who care to look.

In a normal cycle we would see the following:
90% mortgage buyers
40% of that first time home buyers
10% cash buyers

In this cycle, however we see the following:

67-70% mortgage buyers
27-30% first time home buyer
30% plus cash buyers for the past several years

The internals show weakness in demand, not strength. What if the number of cash buyers returned to a normal 10% level of the market place? 2014 has a high percentage of cash buyers but the volume of sales are going down. With a lower percentage of cash buyers expected in the future, the number of mortgage buyers will need to increase just to maintain the current level of sales.

"A key emphasis this year."

If cash buyers went back to their normal historic %, then both 2013 & 2014 existing home sales would be at the lowest level of this economic cycle.
We are talking about year 5 & 6 in this economic cycle not the first few years coming out of the recession. This troubling trend is why mortgage demand needs to grow to keep sales from falling more as total cash volumes continue to dwindle slowly.

It was written pretty clear in the article too, I could have added 2012 but it was year 2013 and 2014 that people started to raise their sales estimates and they missed badly
I mean ouch some as high as 30% sales miss in 2014

Logan Mohtashami says

Dealing with professors, economist, housing pundits and others. I have learned one thing that they all have in common. None of them have a financial lending background

so their model of affordability is outdated in relationship to this economic cycle. This has been the case for 12 years now and their frustration on why demand has been soft comes from this area of not understanding why Americans aren't buying homes like their model would have shown

Weak demand meets weak building. Things balance out. Where's the problem?
Overwhelmingly people care about prices more than anything else.

Politicians, banksters, retirees... they don't care if volume is drowned into the bathtub as long as prices are up.

Heraclitusstudent says

Weak demand meets weak building. Things balance out. Where's the problem?

Overwhelmingly people care about prices more than anything else.

If that was the case then why did sales drop in a year where pricing where increasing

Not to mention we did it 21st century.... Hold... let me repeat this again.... 21st century lows in 2014 for

Mortgage purchase applications
&
First time home buyers