patrick.net

Logan Mohtashami says

tatupu70 says

If we've hit 21st century lows in demand--why are prices rising???? Doesn't that strike you as a contradictory statement??

I tried my best to make the point but like I said you're that guy that didn't care about the prices rising during the housing bubble and your own metrics that you quoted

even showed you that there was an issue in mid 2003

Not sure what else I can say. People like yourself only care about price and nothing else. That is not how I would look at it because the last time that metric was used

2003-2006 and it failed miserably and we are already seeing net negative demand trend.

So you have no answer then?

tatupu70 says

So you have no answer then?

for the 3th time

As long as inventory stays below 6 months and you trend sales growth ( this is possible still) because cash buyers have never been this high as a % of market place

They key is having both 6 months and lower inventory and trend sales growth, this is only possible if cash buyers are still 17%-22% above their historical norms because if it wasn't we would be below the lowest level of total home sales in this cycle

Which means actually 2012-2015 would have the lowest level of total sales in the Great Recession

Logan Mohtashami says

2013 & 2014 were supposed to be the best year homes net overall demand

See this what you're missing. Supply and demand in housing are related. A buyer is usually also a seller. So the net effect is zero.

What you really care about is net demand (intuitively think of demand - supply). Or new buyers - sellers that aren't buying.

If prices are rising, then net demand > 0. If prices are falling then net demand is less than zero

Logan Mohtashami says

for the 3th time

As long as inventory stays below 6 months and you trend sales growth ( this is possible still) because cash buyers have never been this high as a % of market place

They key is having both 6 months and lower inventory and trend sales growth, this is only possible if cash buyers are still 17%-22% above their historical norms because if it wasn't we would be below the lowest level of total home sales in this cycle

Which means actually 2012-2015 would have the lowest level of total sales in the Great Recession

But it's incorrect. Cash buyers are still demand. And sales volume doesn't equal demand.

tatupu70 says

See this what you're missing. Supply and demand in housing are related. A buyer is usually also a seller. So the net effect is zero.

What you really care about is net demand (intuitively think of demand - supply). Or new buyers - sellers that aren't buying.

If prices are rising, then net demand > 0. If prices are falling then net demand

Not if 45% of the buying is done by cash and 1%

That group doesn't really need to worry about the cost of shelter so much

Again this is also why we are seeing declines in YoY price gains since 2013 even with inventory below 6 months

Without the net carry over the price gains are becoming less and less each month

tatupu70 says

And sales volume doesn't equal demand.

This is truly been fun! Honestly

Surprise! Rent Control and Government Directed Middle+Working Class Housing Programs disappear, and, shock of shocks! Housing stock is overpriced and sales faltering.

Obviously we need more NINJA loans and Tax Cuts to help the Free Market!

Logan Mohtashami says

This is truly been fun! Honestly

Good--hopefully you'll be better equipped for your next interview.

Logan Mohtashami says

Supply was up in 2014,

Not really. Supply is at a pathetically low level. Moreover, not reflected in inventory for sale is how many housing units we have compared to the population we have.
People are doubling up, living in closets and garages. Where does that show in your numbers?
If we had an appropriate number of units, there would be a huge inventory or large vacancy rate for rentals.

Logan Mohtashami says

we had more demand in 2013 with less homes on the market and on par and higher rates

Yes. So?

tatupu70 says

Good--hopefully you'll be better equipped for your next interview.

It just confirms what I have always thought, people who only look a price don't look at internal demand drivers

2003-2006 = Exotic Loans
2012-2015 = High levels of cash buyers

Nothing new here

Logan Mohtashami says

Not if 45% of the buying is done by cash and 1%

That group doesn't really need to worry about the cost of shelter so much

Again this is also why we are seeing declines in YoY price gains since 2013 even with inventory below 6 months

Without the net carry over the price gains are becoming less and less each month

Logan, Logan, Logan. Surely you know the difference between rising prices and rising change in prices.

And if it's just the 1% buying, why are prices rising at all? Are there that many folks in the 1% bidding against each other?

Heraclitusstudent says

Not really. Supply is at a pathetically low level.

The math was that supply was higher in 2014 than in 2013. That was one of the core thesis in thinking of the housing demand bulls that sales would be
20%-30% higher in 2014 and for new homes went negative
Sales would get as high as 5.7 - 5.8 million for EHS and they went negative too

Logan Mohtashami says

It just confirms what I have always thought, people who only look a price don't look at internal demand drivers

2003-2006 = Exotic Loans

2012-2015 = High levels of cash buyers

Nothing new here

I bet you find that everything confirms to what you already thought, don't you? No matter what the truth is, you misconstrue it to say what you expected it to say.

Most rational people look at other metrics--like price/rent, for example. But they do so to understand about future prices. Nobody cares what sales volume will be in 2017 unless they can use that information to determine what prices will be doing. I can't believe you fail to grasp such a simple concept.

tatupu70 says

Most rational people look at other metrics--like price/rent, for example.

If you truly believe in that then you would have stopped being a bull in 2003? correct?

Logan Mohtashami says

Heraclitusstudent says

Not really. Supply is at a pathetically low level.

The math was that supply was higher in 2014 than in 2013. That was one of the core thesis in thinking of the housing demand bulls that sales would be

20%-30% higher in 2014 and for new homes went negative

I'm not sure who is saying sales would be 20%-30% higher, based on a marginally higher supply / still at an extremely low level. In any case this is not what I want to talk about. My point is demand for housing is there. It's just not there at the price level that we are seeing.

It seems you translate that into a demand problem which is one way to look at it.... but look, if supply was much higher, prices would go down and sales volume would go up.
So the real problem we are facing is a large number of missing housing units relative to population. Period.

Since you are all about numbers: I'm asking which data you have about housing units availability compared to population.

If we've hit 21st century lows in demand--why are prices rising???? Doesn't that strike you as a contradictory statement??

Not all prices are rising. It doesn't take many high end home sales to skew the averages. Housing in areas where land isn't in short supply have been flat. Rich folk churning their houses back and forth to one another, with higher prices, pull up averages. Higher prices, in this context, with less people working, and crap wages, means less demand.

In horse wagering, there's a term "at a price" where value bettors will take a stab at a horse, at favorable enough odds. There's plenty of demand lurking for houses,,,,,,at a price. I can't imagine what idiots are buying at these price levels. Overpriced housing is also why investors are buying less houses

Call it Crazy says

There currently is approx. 5 months of inventory with low vacancy rates on rentals and multi-family rental unit construction higher than single family construction...

Does that sound like we need MORE available units for sale? What else is wrong with the picture?

4.7-month supply at the current sales pace.
We absolutely need more units for sale, to bring prices down to historic levels relative to wages.
Not only that but this sales pace is extremely weak - drowned by absurdly high prices.

This sales pace doesn't reflect at all the need for housing.

Heraclitusstudent says

Since you are all about numbers: I'm asking which data you have about housing units availability compared to population.

Civilian Labor force is over 156 Million

What we have seen is just soft household formation numbers up until the last report.

This why rental demand has been so strong and first time home buyers has hit it's lowest level ever recorded

In terms of on sale inventory this for EH

In terms of on sale for NH inventory there is a reason why you haven't seen mass production of Single family Residence, it's because the builders know the demand curve isn't there to make their margins, so they want to keep some pricing power.

However, rental demand has been booming and this has been their bright point for them in this cycle

Heraclitusstudent says

I'm not sure who is saying sales would be 20%-30%

The number 1 housing analyst in America did for 2014 even though she revised all her E.H. sales to negative trend growth for 3 years
She still kept her 25% sales growth for 2014 even in April

http://loganmohtashami.com/2014/04/11/miss-housing-nirvana-crys-uncle/

We don't have a housing shortage we had on sale shortage we did hit 6 months inventory last year but only for 1 month and then inventory fell back. There were some sellers who didn't get want they wanted and pushed back from the market place

However, for the first time we did hit the 6 month mark last year

Logan Mohtashami says

If you truly believe in that then you would have stopped being a bull in 2003? correct?

I think I was confused about your question. I wasn't a long term bull in RE in 2003. Like I said, I rented rather than buying because I felt housing was overpriced.

But using inventory as a guide, it was clear that housing prices would continue to rise until some point in 2006.

tatupu70 says

Like I said, I rented rather than buying because I felt housing was overpriced.

So I assume you must have bought a home past 2006.

However, why does what you're talking about have anything to do with housing economics. You're just one man, my data points are a reflection of an entire housing market and the economic cycle we are in.

Logan Mohtashami says

So I assume you must have bought a home past 2006.

Yep.

Logan Mohtashami says

However, why does what you're talking about have anything to do with housing economics. You're just one man, my data points are a reflection of an entire housing market and the economic cycle we are in.

Huh? You asked if I was a housing bull, so I answered. Why do you think I am trying to imply that I represent the entire market? What are you talking about?

And they aren't your data points. They are data points. You have used them to arrive at a conclusion. The data is fact. Your conclusion is opinion.

tatupu70 says

The data is fact. Your conclusion is opinion.

The conclusion is fact the data points is to show why housing is soft in terms of demand. It's the other way around

Just like Janet Yellen said in her testimony today U.S. economy is growing but housing is the biggest disappointment

to be honest I don't know many people in the world right now that don't agree with this even some of the more active housing bulls have kind of thrown in the towel in terms of
demand because we should have had much stronger in total sales.

Actually in fact every single housing analyst and economist got it wrong in 2014 there wasn't anyone that had negative trend demand sales, not one on record.

This was the biggest housing bull in America Ivy Zelman and she was the biggest pro housing bull analyst and even she threw in the towel last year but kept here 25% sales growth call still in tact and that was her biggest mistake as that was one of the biggest miss sales estimates in housing ever

Article is here

http://loganmohtashami.com/2014/04/11/miss-housing-nirvana-crys-uncle/

Logan Mohtashami says

Civilian Labor force is over 156 Million

What we have seen is just soft household formation numbers up until the last report.

Do we have the total number of housing units (including apartments, single family homes and including owned and rented)?

Can we see the graph of the ratio: total housing units/ number of households?

Sales or inventory do not reflect the need for housing.

Heraclitusstudent says

Can we see the graph of the ratio: total housing units/ number of households?

Off the top of my head I believe we have a 123,000,0000 households
80 million are owners
43 million are renters

You do have a lot of multiple renter household especially in big cities so we have to find a data line that counts for that

The reason we have 10% vacancy for housing is that it accounts for 2nd homes which are vacant, roughly 1 million are in foreclosure but not in the market place

Call it Crazy says

we need dropping housing prices that accurately reflect dropping wages, not MORE units..

Housing prices reflect the wages of people who buy them. There are enough rich people to buy houses available now at the price they are sold for. Just look at cash buyers.
Only if more units are available will people with lower wages be able to buy and do so at lower prices.
Your sentence is a charade.

Call it Crazy says

Sure, everyone would love to own a home, just like everyone would like to be a millionaire.... But "wanting" and being "able" to buy based on reality in their lives are two completely different animals...

The median price for a new home in the US is around $260K. Meaning it is possible to build an average home at this level, and home builders make a profit.
The median sale price for an existing house in CA is above $400K.
A lot of people in between would "be able" to buy if we were just building these homes.

The rental demand is just very strong in this cycle, if you look at the data from 2010-2015 it's been a rental demand boom

Logan Mohtashami says

Off the top of my head I believe we have a 123,000,0000 households

80 million are owners

43 million are renters

You do have a lot of multiple renter household especially in big cities so we have to find a data line that counts for that

The reason we have 10% vacancy for housing is that it accounts for 2nd homes which are vacant, roughly 1 million are in foreclosure but not in the market place

What I want to see is the graph of the ratio: total housing units/ number of households. I don't care how many rent or own or even vacancy.
If this graph is trending down, there is your problem.

Heraclitusstudent says

If this graph is trending down, there is your problem.

We had a mass expansion of building to to own and not enough to rent, this is your problem. Too little supply of rental unit to match the demand for renting.
Rent inflation has been too strong in this cycle because we don't have enough rentals out there

Logan Mohtashami says

We had a mass expansion of building to to own and not enough to rent, this is your problem. Too little supply of rental unit to match the demand for renting.

Rent inflation has been too strong in this cycle because we don't have enough rentals out there

I don't see why a home can't be rented.
If there were many houses to rent there would be no reason for rent prices to go up (including home rentals prices). But they did.

As far as the "mass expansion" of the 2000's you have to put that in perspective of the tens of millions added to the population since then.
I think the "overbuilt" phase is long gone.

Heraclitusstudent says

I don't see why a home can't be rented.

If there were many houses to rent there would be no reason for rent prices to go up (including home rentals prices). But they did.

As far as the "mass expansion" of the 2000's you have to put that in perspective of the tens of millions added to the population since then.

I think the "overbuilt" phase is long gone.

I have no idea what you're talking about now

Call it Crazy says

There is approx 5 months of house supply currently on the market?? How many MORE months do you need?

5-6 months is a normal market.
When you actually make a logical point, I'll answer it.

Heraclitusstudent says

5-6 months is a normal market.

When you actually make a logical point, I'll answer it.

You had 5-6 month inventory for a few months last year actually, especially during the strong seasonal months
you did know this correct?

Logan Mohtashami says

I have no idea what you're talking about now

How many houses were built in the "mass expansion of building" you referred to?
By how much did the population grow?
Do we have the total units number?

Logan Mohtashami says

You had 5-6 month inventory for a few months last year actually, especially during the strong seasonal months

you did know this correct?

So?

Heraclitusstudent says

So?

Are you joking or being serious?
Avg month of supply was 5.2 months in 2014?