patrick.net

Ouch!

Whats up with the sinusoidal noise in the apparel line? Is that spring/fall buying frenzies?

New Renter says

Whats up with the sinusoidal noise in the apparel line? Is that spring/fall buying frenzies?

That line is all about deflation since 2000 but seasonal factors make noise to your point

DataQuick on SoCal: March Home Sales down 14% Year-over-year, Conventional (Equity) Sales increase

http://www.dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA140415.aspx

hanhvu02 says

so, no way to buy the house in SCal now. Extremly expensive.

should wait in next couple years, right Logan ?

I thought they were bloody expensive in 2009-11. Apparantly there were enough people with cash who thought differently and still do.

hanhvu02 says

so, no way to buy the house in SCal now. Extremly expensive.

should wait in next couple years, right Logan ?

That's always a personal choice. Housing is the cost of shelter to your own capacity to own the debt. So you're buying a payment PITI not just a home. The variable factors in that equation can only be answered by one self and their own economics.

Logan Mohtashami says

hanhvu02 says

so, no way to buy the house in SCal now. Extremly expensive.

should wait in next couple years, right Logan ?

That's always a personal choice. Housing is the cost of shelter to your own capacity to own the debt. So you're buying a payment PITI not just a home. The variable factors in that equation can only be answered by one self and their own economics.

Yes, but he is asking your opinion as to whether prices will be lower then versus now. Put another way, assuming he can afford that 500K house now, should he take the plunge, or wait in the hopes it drops down to 485K...475K... etc?

So what do you think? Do you think all this pound the table bearishness on sales, inventory, demographics, the crappy economy, etc, etc, will move the needle when it comes to the number one factor for your average joe homebuyer here which is nominal prices?

hanhvu02 says

so, no way to buy the house in SCal now. Extremly expensive.

should wait in next couple years, right Logan ?

Unless you win a lotto. I am waiting to win one. :)

New Renter says

I thought they were bloody expensive in 2009-11. Apparantly there were enough people with cash who thought differently and still do.

Tell me about it. I am simply amazed by people coming up with money to acquire the prized properties. They sell fast like donuts, but the low end/shitty ones are taking more time to sell.

CDon says

So what do you think? Do you think all this pound the table bearishness on sales, inventory, demographics, the crappy economy, etc, etc, will move the needle when it comes to the number one factor for your average joe homebuyer here which is nominal prices?

If inventory stays this low, with high levels of cash buyers and low rates. It won't move the needle in terms of prices

If someone is looking for a 25-30% price decline to prices to get in, most likely you need to see a job loss recession at this point because the Americans who bought homes in this cycle have the capacity to own the debt in scale.

That would be the sure way on getting distressed sales back to the market places ( Outside the 4 millions home that are still in distress from the housing bubble)

Good question though!

hanhvu02 says

what do you guys think ?

See that question has to really be answer from you.
You're buying a payment, so you need to do the cost analysis of living in a condo or buying another home.
- What are you doing with the Condo?
- Is the total PITI payments ok with you for this new home
- How does your retirement schedule look like

A lot variable financial questions with this with your age

New Renter says

I thought they were bloody expensive in 2009-11. Apparantly there were enough people with cash who thought differently and still do.

That was what I thought, too. Seems like I was wrong on one level and right on another. Maybe they weren't expensive relative to the market, just too expensive for what I wanted to pay for a house. I am not 100% about where that leaves me now.

bg says

just too expensive for what I wanted to pay for a house.

really need to calibrate this to what rents are going to do.

I had my eye on this house:

http://www.zillow.com/homedetails/2117-W-San-Jose-Ave-Fresno-CA-93711/18707515_zpid/

when it hit the market in 2009. I thought $375,000 was a bit high, but with this:

http://research.stlouisfed.org/fred2/graph/?g=xr8

from Uncle Bennie, a 3.5% interest rate on a $300,000 principal is a $600/mo cost of money (net tax deduction), and that goes to $0 as the principal is repaid.

This is a place I'd happily rent for $2000, so there you are.

Firing up my rent-vs-buy spreadsheet, it says this has an average TCO of ~$900/mo over the next 30 years. A steal at $375,000, kudos to the guy who picked it up as the world was ending 1Q09.

It's really one of the nicest houses in Fresno. I know, I know, but I even like it more than my bud in Santa Cruz's $1.X million place. Good (almost prime) location, awesome 0.4 acre culdesac lot, pretty sweet architecture.

New Renter says

hanhvu02 says

so, no way to buy the house in SCal now. Extremly expensive.

should wait in next couple years, right Logan ?

I thought they were bloody expensive in 2009-11. Apparantly there were enough people with cash who thought differently and still do.

I'm not sure what you guys were looking at. I was doing extensive research in 2009, and the data clearly revealed that home prices were cheapest ever to own compared to rent. Also, the data indicated that monthly mortgage payments relative to income was at historical low when you factored in the low interest rates. The housing market capitulated in late 2008 when Lehman Brothers collapsed. The writing was on the wall that it was an opportunity once in a lifetime. Of course, some argued against the market. 5 years later and they are still arguing and blaming others for their missing the boat.

On the bright side, some individuals capitalized on this opportunity and made a fortune. Some became multi-millionaires in a few short years and never have to work ever again. How does it feel to kiss that W-2 job good bye forever? Wake up when you want. Go to bed when you want. Buy whatever you want and don't have to worry about the price tag. Everyday is a Saturday or a Sunday or any day you want it to be. It's unfortunate to see some people on Patnet still believe they are smarter than the market.

THE MARKET IS NEVER WRONG. DON'T ARGUE WITH IT OR YOU WILL GET MURDERED.

Apps soft down -18% on a 4 week moving average from last year and housing starts and permits soft as well.

Logan Mohtashami says

Apps soft down -18% on a 4 week moving average from last year and housing starts and permits soft as well.

That means buying activity is down across the board, whether you are looking for first time buyers, move up buyers, or investors. Prices will still hold though. I like your conclusion about prices going down only in case of a jobless recession cuz I don't see interest rates jacking up to 5%+ in near future.

bubblesitter says

That means buying activity is down across the board, whether you are looking for first time buyers, move up buyers, or investors. Prices will still hold though. I like your conclusion about prices going down only in case of a jobless recession cuz I don't see interest rates jacking up to 5%+ in near future.

There is your inventory problem, because it's keeping pricing power.
Now even though there isn't any growth in housing we are still looking at 4.8-5 million homes being sold this year. So, it's not that much of a drop off with this low of inventory to impact prices in a negative way for 2014.

Logan Mohtashami says

So, it's not that much of a drop off with this low of inventory to impact prices in a negative way for 2014.

Let's come to the point. When do you think next recession cycle is gonna hit?

bubblesitter says

Let's come to the point. When do you think next recession cycle is gonna hit?

If I had to put a time frame. Look for economic numbers to get weak 12-18 months after the first rate hike. So, late 2016 early 2017 time frame.

If long term rates blew up higher that's another story.

However, the 10 year note is in a long channel hear at 2.47% -3.04%
So a break under 2.47% would mean activity is getting worse. However, I expect GDP to be 2.3-2.9% for the rest of year making 2014 be a 2.4%-2.7% year.
I was looking for a 2.4% year this year which is actually bearish compared to other forecast

Logan Mohtashami says

ook for economic numbers to get weak 12-18 months after the first rate hike.

What if there is no rate hike?

bubblesitter says

What if there is no rate hike?

If there is no rate hike, that would imply the job market got very soft and inflation never broke 2% on the CPI level for them. That is probably unlikely. However, for this question lets say they don't hike rates.

You're looking a 1.2%-2.5% GDP for a long time and if inventory levels got to 9 months, then you can see some pricing power come down.

However, this is unlikely, I see QE ending this year. Always thought it would end in the 2nd quarter of 2014, so I was wrong there it will be near the end of the year which would imply a rate hike late 2015

Logan Mohtashami ‏@LoganMohtashami
#Fed #Yellen #CNBC Fed can't solve this problem

Logan Mohtashami says

Logan Mohtashami ‏@LoganMohtashami

#Fed #Yellen #CNBC Fed can't solve this problem

Nikolai Dmitriyevich Kondratiev never saw it as a problem......Gonna be a long Winter!/p>

http://m.financialsense.com/contributors/christopher-quigley/kondratieff-waves-and-the-greater-depression-of-2013-2020

Call it Crazy says

Wow, you're just a bundle of good news today....

I am only bounded by the economic data. On a bright note CPI inflation numbers should hit 2% by the end of the year due to rent inflation

Call it Crazy says

media is when referring to the wonderful "housing recovery"

I am working on getting CNBC for a housing Interview... I won't show any mercy!

March figures are due, although it does not matter much for folks on this forum but most buying/selling activity is dictated by biased media and realtors!

bubblesitter says

March figures are due, although it does not matter much for folks on this forum but most buying/selling activity is dictated by biased media and realtors!

In all fairness, of course it is manipulated. This is a tough society to work and live in. They real estate agents and employers are protecting their livelihood. Lying, cheating and manipulation is considered good business. If we justify corporations using slave labor simply because we believe lower prices for the corporation justify the participation, then why should we hold real estate agents and the media to higher standards?

We have no more standards. For a citizenship so fearful of anarchy, we sure seem to embrace moral chaos.

Bubblesitter, you have too many scruples. If you want to make it in this society you need to use, abuse and destroy.

Another item we have to calculate for this century is that
-Globalization
-technology
-debt
-demographics
Will likely lower growth capacity for the U.S. even the Federal Reserve with their bullish outlook for growth is trending in 2%-2.5% growth model for the U.S.
The western countries are just maturing where the eastern countries have the fast growth model.
Looking longer term we will have a society that is getting older, didn't save enough enough for retirement and will cost more to take care of and this is looking out 20-50 years and the age group of 35-50 are lacking the funds to retirement and we can forget about the 35 and under crowd as they are much conservative with their cash than previous generations with the LTI metrics they live by

Logan Mohtashami says

Call it Crazy says

media is when referring to the wonderful "housing recovery"

I am working on getting CNBC for a housing Interview... I won't show any mercy!

Make sure you let us know the date and time.

hrhjuliet says

Make sure you let us know the date and time.

Will do! On that note, this lovely chart and article for all to ponder this weekend. Happy Easter to those who celebrate it

http://streettalklive.com/analysis/daily-x-change.html?id=2175

Even the most bullish housing bull has cut E.H. sales so bad that it shows no growth to 2016 http://loganmohtashami.com/2014/04/11/miss-housing-nirvana-crys-uncle/ …

Logan Mohtashami says

Even the most bullish housing bull has cut E.H. sales so bad that it shows no growth to 2016 http://loganmohtashami.com/2014/04/11/miss-housing-nirvana-crys-uncle/ … pic.twitter.com/U9cB8TXaZJ

Exactly.

Logan Mohtashami says

CDon says

So what do you think? Do you think all this pound the table bearishness on sales, inventory, demographics, the crappy economy, etc, etc, will move the needle when it comes to the number one factor for your average joe homebuyer here which is nominal prices?

If inventory stays this low, with high levels of cash buyers and low rates. It won't move the needle in terms of prices

If someone is looking for a 25-30% price decline to prices to get in, most likely you need to see a job loss recession at this point

That's why I don't understand all of this pound the table bearishness. What's the point of being bearish if you know that prices are going up?

toothfairy says

That's why I don't understand all of this pound the table bearishness. What's the point of being bearish if you know that prices are going up?

There is a difference between economic theory and economic cycles and prices rising

See in a good economy people make money, more money and spend more.

In a bad economy people borrower more than their income capacity lets them to and that is how consumption is fed.

This is why the red flag was waived last quarter when for the first time really in this cycle we had a collapse of the saving rate and debt was re leveraged

Now in bigger economic theory what does this mean.
I had growth a 2.4% this year which was better than last year

I see Q2, Q3, Q4 of 2014 being 2.4-2.9% growth

So the question is, once this ultra low rate environment goes away.
Talking a 10 year note at 4.5% -5.5% and fed fund rate 4% higher.
What will the economy look like.

Now if Americans are having the worst time we have ever seen in a rebound economic cycle getting mortgage. The question would be can American afford homes at a much higher cost?

This is why it was relatively easy back in May of 2013 to write and article stating that " Forward Demand carry over consumption" should be main concern for the housing market not the theory that Housing has just started a boom cycle of year over year http://loganmohtashami.com/2013/05/07/housing-mammoth-stuck-in-tar-has-bigger-problems-to-worry-about/growth

See it was housing inflation ( PRICES rising) and rates together which turned the entire market around. Hence why the Housing tone index started to go negative in May.

So while prices are rising due to a inventory crisis created by the housing bubble, it has gotten to a point to where 4.5% interest rates are simply to high in this economic to promote growth in existing home sales.

Now the stock market is a different discussion all together which I love having. However, for this thread we stick to housing metrics and the correlation with this economic cycle

With that said you really need a job loss recession to create a massive down turn in home prices on a national level because these Americans who have bought homes can live in them unless some type of economic event happened to where they can't make the payments and the house will go into a distress sale. I can't see that happening until we see the first line of economic indicators start to fail and a lot will be show with unemployment claims which have no recessionary numbers in them

A lot economic models to show recession forecast, not seeing any at all showing declining negative growth while ZIRP is in play and 10 year level so low