patrick.net

Strategist says

Logan Mohtashami says

Some will refinance but it won't spur housing purchase demand

Because of silly and tight requirements.

You cannot get an economic recovery without a housing recovery. Loosen up the requirements to get housing moving again or I'm moving to Australia.

Don't you already own a house? Have an opposite opinion from you, downpayment should be at least 20%, in fact, my feel should be at least 30%. Tight requirements would in the long run, slow down the appreciation.

House supported economy growth is not good. Is essentially growth through leverage and debt. Much prefer growth through increased productivity and entrepreneurship.

So the 10 yr went up despite the best efforts of the Fed?

indigenous says

So the 10 yr went up despite the best efforts of the Fed?

10 year yield action 2014

hanera says

Strategist says

Logan Mohtashami says

Some will refinance but it won't spur housing purchase demand

Because of silly and tight requirements.

You cannot get an economic recovery without a housing recovery. Loosen up the requirements to get housing moving again or I'm moving to Australia.

Don't you already own a house? Have an opposite opinion from you, downpayment should be at least 20%, in fact, my feel should be at least 30%. Tight requirements would in the long run, slow down the appreciation.

Tight requirements would also increase the demand for rental homes, and thus the rent.
Overall our economy would suffer because we would be building less homes. Home building creates tremendous economic growth.

hanera says

House supported economy growth is not good. Is essentially growth through leverage and debt. Much prefer growth through increased productivity and entrepreneurship.

There should be a law requiring every person to get an iphone 6. :)

Strategist says

Logan Mohtashami says

Some will refinance but it won't spur housing purchase demand

Because of silly and tight requirements.

You cannot get an economic recovery without a housing recovery. Loosen up the requirements to get housing moving again or I'm moving to Australia.

An article like this is a good reminder that you can ask retail price plus 300% for your ______(fill in the blank), but where is the buyer at that price?

Remember. Housing demand is at 20 year lows in an environment of 25 million excess empty houses.

Logan Mohtashami says

You're right to the novice that might not make sense.

Logan, since you are in a position where many people read your blog, it's important that you use correct terminology. All you had to say 10 year note yield collapse instead of 10 year note collapse.

You job is to provide basic education to your readers. For bonds, when yield goes down, price goes up.

tr6 says

You job is to provide basic education to your readers. For bonds, when yield goes down, price goes up.

I get that, what I don't get is the context, is he willing to accept a 2 +-% return? Or is he leveraging somehow?

Not to mention the risk when everybody heads for the exit and there are no buyers? As the Fed has created a bubble in bonds as well.

tr6 says

You job is to provide basic education to your readers. For bonds, when yield goes down, price goes up.

First few words makes it clear what I am saying, but you're correct I should have added yield to the title. Not everyone understands that when bonds are doing well that means yields are headed lower

"With the violent drop of the 10 year note yield in the past two days, from 2.28% to 1.95% , we can expect changes in the mortgage rates offered by the major banks as well. Wall Street “analysts” who predicted the 10 year yield of 3.5% and 4% for the 10 year note in 2014 should hang their heads in shame as making the worst 10 year note calls on record."

indigenous says

I get that, what I don't get is the context, is he willing to accept a 2 +-% return? Or is he leveraging somehow?

The context of the discussion was really to show that a few people can refinance and that's it. Don't expect housing demand in terms of purchases to pick up due to falling rates.

All the people that said bonds were a bad investment for years now have been wrong and wrong badly. However, that wasn't the point of the discussion with the article.

Today's action was very unique and drastic 35 basis point spread in one day is very rare to see even on a Job's Friday or a Fed meeting

Strategist says

Home building creates tremendous economic growth.

You may have equated economic growth to improved quality of life and job growth. GDP growth doesn't always mean that at all. What we want is to have as low unemployment rate as possible and each American has a reasonable good standard of living.

Panic in the 10 year yields was truly epic but we can see volatility is back in the market

Logan Mohtashami says

Top 1% save 40% of their income in 2012, bottom 90% save nothing at all. Amazing. How can the economy handle this?

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

real per-capita (age 25-54) total government spending

that's the glue that holds our fallen economy together. If the GOP takes over the system in 2016, I expect it to expand actually.

But if we continue with divided government as we have now, I expect the spending standoff to continue.

Both expectations are based on the 1990s pattern here.

hanera says

House supported economy growth is not good.

yes, housing (after the basics are taken care of) is mere consumption not exportable wealth-creation, which should be our actual national priority.

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

real per-capita (age 25-54) trade deficit

http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm

Logan Mohtashami says

Top 1% save 40% of their income in 2012, bottom 90% save nothing at all.

Not much explanation of the terms,save,income and 1%. Where does capital gains and dividends fit into this? The top 1% by income and the top 1% by wealth are two different groups.

bob2356 says

Not much explanation of the terms,save,income and 1%. Where does capital gains and dividends fit into this? The top 1% by income and the top 1% by wealth are two different groups.

It goes into the thesis that the 1% ( Net wealth) they can't really spend that money fast enough to have great velocity into the economy. So, you have a lot money sitting on the sidelines earning something but no real consumption from all that wealth. I know a lot given to charity.

If someone has 400 million dollars of net work, 40 million lets say are assets, cars, homes, stuff and the other 360 million are sitting in safe securities. That is a lot money sitting on the sidelines

Someone who has 10K net worth makes 40K a year he or she really spends majority of his or her money on expense item.
Rent, mortgage, car, food, child care, doesn't have much left after tax/expense items are paid off to consume.

So an economy that has so much wealth into so few hands, that wealth for the most part doesn't really expand into the economy as fast as someone else who makes and has a lot less.

One of the reasons I always knew housing demand would be soft from Main Street America is that incomes are simply too low for growth expansion.

https://www.youtube.com/watch?v=o9O_FDLPdgA&t=10m35s

If it wasn't for the rich buying homes with cash 20% above historical norms housing demand would have been weaker.

It is what it is, we have gone through 6 years now with rates under 5% an no net gain % on mortgage buyers but cash buyers have been the strongest on record both from Foreign & Domestic buyers

With no end in sight?

I guess pimco is glad they got rid of Bill Gross. He's been super bearish on bonds.

I'm stunned that he (Bullard) would say that...

indigenous says

I'm stunned that he (Bullard) would say that...

After 4 trillion dollars of QE as well!