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We import deflation.
Core CPI inflation has been rising for over 1 year now
Yes we can import deflation ... Kind of
Short term, did we reach the bottom? Or more to go?
I would say a lot of these stocks have hit a short term bottom because 2012/2013 pricing had a lot less sales into the market place
To me now more than ever because we will have over 500K in sales this year, it's all about profit margins and people forget on the earning call for TOL they had some profit margin issues
That's what you want to do with the builders hear the earning calls and get a good idea on profit margin .. much lower levels on some of these stocks are pointing to a peak builder cycle, don't believe we are there yet
Last year was just doomed to fail all due to the over hyping, we don't have that anymore this year and a lot of these stocks and index are in bear market territory, much better value for $ now that last year's madness
TOL had it's earning and it's not going down stock price?
Almost back to 27! :-)
I'd venture we have a bit more to go downward.
Oil is still accumulating and storage is disappearing fast.
I'd venture we have a bit more to go downward.
It wasn't the best report and the CEO looked very unsure on CNBC ... but the price action wasn't too bad even though the stocks really didn't to much
New homes median sale price (SA) was $282,600, down 3.2% from Dec and down 4.6% from a year earlier. Lowest median sale price since Sep '14
This is what I was talking about, you have to know look to see if we have profit margin hits or is the falling median price a function of lower priced homes
https://finance.yahoo.com/news/theres-reason-excited-u-housing-152551847.html
When the brothers toll start pumping away a large decline in sales, it's time to be cautious.
When the brothers toll start pumping away a large decline in sales, it's time to be cautious.
You can side why I targeted TOL first outside all the builders last year on CNBC
Some people might believe the Median Price peak or slight decline is very bad, I say it's more a bullish factor since the cycle was so high end
But companies like KBH are trading at liquidation value under $10 when we talked about it before
Not an inflection point, but a continuation of what started in 2012.......Massive price increases.
Massive price increases.
I know you guys on Pat.net care so much about price, which isn't the main thing with me because everyone talking about Price were Housing bubble pushers in the last cycle
However, look at it this way a
If you can't even match sales expectations with rates below 4% and rising inventory, then what is a builder to do
Hence why value is their for KHB since it's selling at liquidation but TOL need more demand convictions for TOL and others
This is what I was talking about, you have to know look to see if we have profit margin hits or is the falling median price a function of lower priced homes
Profit margins are one thing. Profits an other.
If you can't even match sales expectations with rates below 4% and rising inventory, then what is a builder to do
Build more basic, lower priced home. Stop focusing on the overpriced luxury.
Profit margins are one thing. Profits an other.
If it was only that easy ;-)
Build more basic, lower priced home
DHI is trying to get into that market
But I believe the new century long push to build bigger homes has caught up to the builders, this is a core thesis of mine over the years on why new homes wasn't going to have Nirvana escape velocity that some on wall street had predicted
The fact year 8th of the economic cycle, 5.8 months of inventory and under 4% rates, to even have a Year over Year Miss with a baseline 500K total home sales year last year
(*$#@)_#@(*#@ ;-)
Next 4 months revisions and median price will be telling, if we can get growing sales with low price inflation, = more smaller homes coming into the market place and this is what is needed
Need to see a in line number tomorrow for new homes 510 with no negative revisions.
Then we can work on getting some growth in the next 4 months year over years. The Comps year over year get a lot easier after tomorrows report
Notice the builders are acting better!
At this time next year, ITB will be 50% higher at $40.00. IMHO.
At this time next year, ITB will be 50% higher at $40.00. IMHO.
Ughhhh
You better had picked up some shares with the recent dip!
At this time next year, ITB will be 50% higher at $40.00. IMHO.
Ughhhh
You better had picked up some shares with the recent dip!
Have enough shares on ITB. Picked up 100 option contracts (leaps) on the dip. I'm very very confident.
Picked up 100 option contracts (leaps) on the dip
fair enough
What about you? Go for the leaps. You will thank me one day.
As always.... Key is revisions with today's numbers, revisions positive that is the bonus for trend.
4%-8% growth this year for new home sales with upside if median prices cools down
But for that to happen you need to start hitting the headline numbers with no negative revisions
Number of people age 25 - 54 vs. # new homes for sale.
The cycle is very soft, weakest housing demand cycle ever for a up cycle, but for this report
Revisions were positive, that's the key.
Already anyone who was looking for 20% growth again is going to be wrong for the 4th year
Comps are still negative year over year but the comps get a lot easier from now on because March 2015 was the start of the decelerating growth
The sickness of using at mid 500K number as a high comp in year 8 of the cycle with 4% rates
http://loganmohtashami.com/2016/01/25/home-builders-new-homes-sales-and-the-affordability-myth/
I'm wondering.. instead of the sale price, would you have a graph reflecting interest rates (like mortgage payment for a 30yr mortgage)? It may give a better snapshot of where the bubble is/was.
interest rates
One of the major flaws with the housing pundits in this cycle
They assumed as they said, Housing is the most affordable ever... because 30 year mortgage were at a post WWII low for this cycle and really have been under 4.5% since 2013 and under 5% since early 2011
What they don't take into consideration, is the size of the debt and PITI inflation matters more to housing affordability than just the rate, rate is a one variable housing inflation metric
Bigger the homes, bigger the debt = the bigger total payment
Hence why new home sales missed sales expectations 3 years in a row in years that some of these pundit were forecasting 20%-40% growth
They were using the lowest level of sales, starts and permits to call for a V shape bounce
which this is the reality
KBH
It's a crap builder but it had value $10 now it's up to $14 if anyone took that risk!
After today's negative YoY print, the next 4 months is really it.
If you can't show growth on the YoY prints in the next 4 months with no negative revisions, then ever my 4%-8% growth metrics are simply too high.
Considering how low new home sales are at, this isn't asking a lot
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http://loganmohtashami.com/2016/01/25/home-builders-new-homes-sales-and-the-affordability-myth/