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I am hearing from a few of my friends that rentals-atleast in the east bay-are slowing down and even slightly dropping? Is this true?
I am hearing from a few of my friends that rentals-atleast in the east bay-are slowing down and even slightly dropping? Is this true?
Yes, there is a bit of a slow down in rents and sales as well. I saw a house fall through from pending that I though would go for sure. Also one of my neighbors that bought a house at the bottom is putting it for sale (never lived in it for 4 years; I think he is Chinese national).
I'm expecting a 15% increase in the OC median from today to Dec 31, 2016.
Are you still drinking?
I just stopped drinking. For some strange reason there was nothing left in the bottle. :(
I'm in San Diego and I'm seeing a lot of homes come onto the market on Redfin, which seems weird given it's not Spring/Summer.
Also,
New Homes 500K in sales
Existing Homes 5.2 million in sales
Though New Homes is more important to the economy
Each sector has it's own value , New Home inventory is well over 5 months now, so their is no reason for the slow down in the rate of sales from the start of the year, unless the demand curve really did get weaker from a 0.50% move up in rates.
Existing homes as been more steady, though growth has been more difficult since the Taper spike in rates in 2013.
5.10 2013 Miss
4.90 2014 Miss
5.20 ( roughly) around there, is on par with some estimates .
Not much velocity in this cycle, a lot low bar starting points
New Homes 500K in sales
Existing Homes 5.2 million in salesThough New Homes is more important to the economy
Each sector has it's own value , New Home inventory is well over 5 months now, so their is no reason for the slow down in the rate of sales from the start of the year, unless the demand curve really did get weaker from a 0.50% move up in rates.
Existing homes as been more steady, though growth has been more difficult since the Taper spike in rates in 2013.
5.10 2013 Miss
4.90 2014 Miss
5.20 ( roughly) around there, is on par with some estimates .Not much velocity in this cycle, a lot low bar starting points
OK, I get it. Please remember December 2011 was even worse. A lot lot worse. But what happened? A huge wave of desperate buyers who suddenly decided the time was right to buy. This Spring the time will be ripe again, except it will be a Tsunami of desperate buyers.
OK, I get it.
No you don't, it is about demographics, and hopefully jobs
I thought you understood "theory of comparative advantage" This is a U Turn.
I thought you understood "theory of comparative advantage" This is a U Turn.
Splain me
OK, I get it. Please remember December 2011 was even worse. A lot lot worse. But what happened? A huge wave of desperate buyers who suddenly decided the time was right to buy.
Disagree 100% due to this fact, if the 50 year avg for new home sales is 700- 750K, just the average rate of sales.
The add the fact
322 million Americans
153 Million working Americans
Interest rates below 5% since early 2011
Here is the rolling 8 year sales trend, ignore the miss by Wells Fargo for 2015, it's still a toss up if we even close at 500K this year....
That means 8 years running we have never broken over 500K sales with the lowest mortgage rate curve post WWII
This is why I found the pent up demand thesis not only to be funny, but to be mathematically incoherent with the data
I wonder if it is the modern economy. With jobs being so fluid and transient-do people even want to buy homes? I bought one , because it is a low cost area. now if you have a business etc or an overseas Chinese dude with tons of cash you want to get out of China-then fine. But for the average American job person-upper middle income-one never knows what the newest corporate strategy-aka outsourcing-Is going to hit.
Tru Dat, but the mercantilism will presumably subside for a while. IOW China has to start building a consumer society and that is not going to happen by continuing to devalue the yuan. Which is why Mexico and other countries are going to start seeing some benefit from this shift. Other than India, I don't see any other countries that can play the same game as China. And India is hopeless mired down with bureaucratic corruption. The US on the other hand will grow hopefully with good jobs.
I wonder if it is the modern economy. With jobs being so fluid and transient-do people even want to buy homes? I bought one ,
People tend to buy when they have kids,
2015 has 5.7 million roughly total homes bought, this with a mild demographic cycle too.
I have always had this economic process for strong demand curve housing cycles
Americans
1. Rent
2. Date
3. Mate
4. Marry
3.5 - 6 years after marriage = kids and = home buying. College educated dual incomes Americans, the best of bread buy homes. The rest are renters and probably will be renters the rest of their lives unless something changes for them
This is a huge factor why I was 100% sure back in 2010 this cycle would have the worst demand curve post WWII
However, renting for longer periods is a norm now and staying at home with your parents is very strong in this cycle
What I wrote in 2010
“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 of 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.â€
A lot pent up demand for renting in coming years
Time, these Americans simply need more time
Also, Gen X got thrashed in the Housing bubble and those cashing out 2-4 times took out a lot equity, it's why you see a lot boomers renting homes, household formation has been strong by those over the age of 40 renting
Logan prides himself on emulating Harry Dent. (8^())
I like Harry, but his thesis on demand curve economics in relationship to the economy is dreadful, I have actually never read his work
for this reason. Once in a while I see a headline that always gives me his laugh. I do have some of his readers as facebook friends, so it seems like we are in line with things
since demographic economics is something that rarely gets mentioned.
However, Dent has been terrible this cycle, his tactic is prolong his 6,000 call until the cycle ends which in this cycle, the cycle lasted to long for the Perma Bears.
I have had a lot fun with my Perma Bear friends in this cycle ;-)
Not to mention Dent called for a crash in 2010, he probably had the worst economic cycle out of anyone in the past 50 years
Not sure Dent knows what a business cycle is.
Still he is a great marketing guy, anyone else that would have been this wrong for 7 years would have been fired or lost his readership with 3 stock market crashes in 7 years.
He does point out how effective demographics are in predicting markets. Beyond that not so much, there are too many moving parts in an economy just to focus on demographics.
there are too many moving parts in an economy just to focus on demographics.
I am huge demographic guy myself, but the sole focus on demographics and not adding any other moving part variables into the equation leads him to some of the worst calls I have ever seen in my life.
Malthus failed, look at the price of wheat, he never would have believed on commodities being so much cheap at this cycle of human history
Perhaps Malthus can be excused as technology was not so obvious a catalyst for change as it is today. Who would have predicted a Norman Borlaug?
The reality today is that technology trumps all other factors in the economy you might say economic progress/higher standard of living is solely from technology.
That's why you need to believe that humans will still move forward with process and technology advances
:-)
2015 Commodity ETF Returns
Oil: -46%
Nat Gas: -41%
Broad Commodities: -28%
Agriculture: -17%
Silver: -12%
Gold: -11%
Not to mention Dent called for a crash in 2010, he probably had the worst economic cycle out of anyone in the past 50 years
To be fair though, guys like Dent and Schiff make good arguments as to why the economy should be worse than it is. If the gov't suddenly decides to create trillions in easy money to fight off recession, then it's just kicking the can down the road and temporarily making doomsayers "look stupid", but it doesn't mean they're wrong. It's not in the control of doomsayers if the gov't intervenes to delay the inevitable.
Am I wrong?
To be fair though, guys like Dent and Schiff make good arguments as to why the economy should be worse than it is.
When Dent says down 6,000
That means millions of jobs lost and really at this point a 2nd Great Recession, he has 3 calls in 7 years of this happening. = #EpicFail
Peter is just dreadful,
Gold 5,000
Oil 200
Recession, Recession, Recession
Part of me doesn't really care because this is marketing material for them which I understand why they have to do it.
Economic cycles have 7-10 year life spam so be bearish 100% of the time, you will be right 3X in 20 years.
So, they can't ever say anything good really because their followers would leave them. This is the Zero Hedge game plan.
Yellow Journalism, Or Bubble and Crash talk is very popular this century so it makes sense for them to be very down beat on humanity itself.
Marc Faber is another one in the group
To be fair though, guys like Dent and Schiff make good arguments as to why the economy should be worse than it is. If the gov't suddenly decides to create trillions in easy money to fight off recession, then it's just kicking the can down the road and temporarily making doomsayers "look stupid", but it doesn't mean they're wrong. It's not in the control of doomsayers if the gov't intervenes to delay the inevitable.
Am I wrong?
If they are way off and wrong after many years, yes, they are wrong. Sure, they printed trillions, but a growing economy can absorb the trillions over time. Some of it would be taken back when the economy starts taking big jumps.
Hi Logan,
Can you please give a short summary for "Dummies" please? Something like "will go up by x%, or will go down by x%"?
I don't understand the charts or what they mean really, not my industry.
Yellow Journalism, Or Bubble and Crash talk is very popular this century so it makes sense for them to be very down beat on humanity itself.
Marc Faber is another one in the group
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
I sometimes wonder what the consequences in a long run will be. The "too big to fail" were total crap and are now crap that is in charge and is even bigger. Can't think of this being anything good in a long run.
I don't understand the charts or what they mean really, not my industry.
7. U.S. Economics
The strong dollar and the collapse in oil and the mining sectors have taken a bite out of economic output in certain states, but auto sales and other personal consumption metrics have kept the US economy on a slow and steady growth path. I predicted 2.5% growth in 2015 with job gains around 210K a month. GDP growth is going to be slightly lower than I predicted, unless Q4 falters. YTD job gains are running at 209K per month with one more jobs number left to be revealed for the year.
Prognosticators, who have been calling for a recession due to the commodity crash, are missing the point. This is not a U.S. story but is a significant issue for other countries like China, Japan, Europe, Russia and Brazil who are suffering through both the commodity crash and the demographic trend of aging populations. I predict 1.9% to 2.3% growth in the U.S. for 2016. I predict job creation numbers to be down slightly to about 190 -205K/month. The JOLTS data (Job Opening Labor Turnover Survey) is now showing that we are entering into a phase of a tighter labor market. With the unemployment rate at 5% and 5.4 million job openings, we are seeing the first breath of a tight labor market.
On the other hand, prime age labor force is not growing fast enough to create a major boom in job creation numbers. The demographic group ages 21-25, is huge for the U.S., but they need a few more years before they impact the labor market in a significant fashion.
On Recession Watch?
For our friends who constantly post “a recession is coming, a recession is coming†here are a few recession indicators to follow in 2016 to determine if a recession is, in fact, coming.
1. The Fed has started to hike rates, and, typically, the Fed is well into the rate hike cycle before any recession.
2. Unemployment claims would need to rise well above the 300K, on a 4-week moving average, without a 1-time economic event as a reason, such as the Sandy storm/flood. As you can see below, even with the commodity crash and jobs lost due to it, we haven’t experienced an increase in claims.
( Higher Claims Is Bad) - Job losses
Also you would need to see more sectors with increased unemployment claims . Mining companies were negative in job creation number, and manufacturing jobs were barley positive – but these two sectors alone cannot bring the US economy into a recession.
3. If leading economic indicators (LEI) trend lower for 4-6 months, with rising unemployment claims, then we may have a recessionary trend forming.
In Short
Fed rate hike cycles starts, watch for first level stages unemployment claims to rise and Leading Economic Indicator to fall at the same time before any major recession calls or crashes happening
The one disagreement I have with that statement is it skips over the necessity of the economy correcting through recession. This step was skipped just as Hope indicates.
Exactly. This could be likened to any personal financial situation...I buy too much house, really nice cars, etc., but I don't have the income to pay for them. So, I take out tons of loans and max out credit cards to live such a lavish lifestyle. Any personal advisor would say that my life is gonna come crashing down, but I could "prove him wrong" if I'm continually able to find new credit to continue the facade...now it's just a matter of how long I'm able to continue the facade before tragedy hits. Can I really grow myself out of all this with all the debt and easy money I've taken advantage of? Highly doubtful.
2015 Commodity ETF Returns
Oil: -46%
Nat Gas: -41%
Broad Commodities: -28%
Agriculture: -17%
Silver: -12%
Gold: -11%
It's unclear why the inflationistas use external/global resources in their predictions as obviously it is hard to spot manufactured inflation in a good that the producer nations are spewing out like no tomorrow. Demand is currently totally overwhelmed by supply. Yet, gas prices are higher than they should be. As soon as local factors such as refineries and taxes come in you can clearly see the inflationary path we have been on. If you take the local essentials such as shelter, education/care, healthcare and (local organic) food you can clearly see inflation, actually stagflation rearing its ugly head. That's why inflationistas and deflationistas are rarely right, because the reality is and has been a combo of both. and it is clear that the current administration and the past have bee simply kicking the can down the road with the help of the Fed. Those trillions of debt do matter, federally and municipally as taxes and cost of living have been creeping up while wages cannot keep that pace. Schiff though did nail the housing bubble and deserves mucho credit for coming on public TV and having assholes laugh in his face (perhaps he saved a couple of sentient homeowners from the pain it unleashed) as opposed to the armchair quarterbacks claiming that they "totally knew about the bubble" as well. And the next one has been inflated.
Household debt service payments as a percent of disposable personal income dip to 10.025% http://bit.ly/1YLWPwQ
I don't understand the charts or what they mean really, not my industry.
7. U.S. Economics
Thanks Logan. The problem is that most want to know a recession is coming "before" it hits because that's when investment strategies have to be realigned (e.g., get out of stocks). On both of those charts you posted, any of those indicators could start turning at any moment...this means cash/bond/stock investments have to change quickly and not by the time a recession has been declared, which is too late.
Yet, gas prices are higher than they should be
Back in the old days you would see production cuts by now but a nasty fight going on to see how many oil companies can BK at this stage
The problem is that most want to know a recession is coming "before" it hits because that's when investment strategies have to be realigned
Timing markets is very difficult in terms of long term portfolio game plans. I totally get that people like to trade in and out of markets and a recession makes shorting a lot stocks much easier because estimates falling usually is a 6 to 8 quarter thing.
I am always 100% invested in my long term portfolio
80% Stocks
50% U.S.
20% International
10% MASI ( Ticker Symbol)
15% Bonds
5% Reits
Add money each month, never leave, the lowest I can go with equity % is 60% and the highest 80%
Trading account that is a whole different story and much more fun, but that is something I keep close to my chest, I rarely talk about it outside some of my trading friends.
I sometimes wonder what the consequences in a long run will be.
Logan will indicate that because of the "king dollar" there won't be any consequences. For the foreseeable future he is right. At some point the dollar will be replaced by the BRICSIZ and that will change things very quickly. This is because it is unlikely that there will be two competing reserve currencies, i.e. it has not happened in history. The other is that reserve currencies do not go on forever.
For now the inflation is exported, meaning that other countries currency does not float as the dollar does with the US. So the other countries debase their currency to keep even. But there is always a time lag (margin) that gives the country who first receives the inflated dollars (the US) an advantage
In effect the US does not have price discovery which is true with communist countries as well. The problem with this is that price discovery is the benchmark of value. So we see graphs like this:
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http://loganmohtashami.com/2015/12/30/bloomberg-interview-2016-housing-predictions/
Another note, since I went on CNBC (June) and warned that TOLL Brothers was over rated and Builders index is pricing in too much growth and not growth from a low bar...
Both have fallen double digits from the top, XHB, barely positive for the year, all that hype early on with housing, fell flat toward the end of the year
#Housing
#Economics