patrick.net

Call it Crazy says

Strategist says

and Hawaii if I have my way. I guess Hawaii has no chance :(

We know you like Obama, but do you really want to live next to him?

Hell no. I like him, not love him.

Call it Crazy says

Yeah, that's the ticket... Let's bring out 50 year fixed rate loans, hell, make it 75 years...

The goal of banks is to create mortgages designed to never be fully paid back: people would just sell the house when they retire or die and close the rest of the mortgage.

That way banks get to rent houses they don't own (get a rent out of them).

Remember interests payments increase exponentially with the duration of the loan, and are heavily front loaded in the payment process.

Sorry, your graphics make no sense. It looks pretty but says absolutely nothing. When it says nothing, you know it is wrong. A bunch of confusing, circles, colors and death trap is just visual crap.

There's plenty of pent up housing demand. See Bellingham Bill's graphics, simple, easy conclusion. The 23 year old and their coming cohorts is your future demand and a housing market with a low homeownership ratio is your tailwind.

SFace says

There's plenty of pent up housing demand. See Bellingham Bill's graphics, simple, easy conclusion. The 23 year old and their coming cohorts is your future demand and a housing market with a low homeownership ratio is your tailwind.

I have heard this pent up thesis for 7 years. Even after 7 years this was the result

2014 = lowest mortgage purchase application number in the21st century

2014 = lowest first time home buyer % this century

2014 was net negative YoY for existing homes sales and when new home sales get adjusted from their 1.2% they will be negative YoY as well.

Age group 23,24 are 25 are the biggest in the U.S and adjusted to real dollars their income to PITI inflation capacity is the worst we have seen this century

However, don't let the data stop you for saying pent up thesis for a few more years. Dual income factor model requires marriage

1. Rent
2. Date
3. Mate
4. Marry

We had a nice bump in household formation which means we have good rental demand for 2015

You can't break the laws of math because you have an economic assumption theory. Facts are such a stubborn thing.

I can see why the data confuses you because it doesn't fit into the pent up demand thesis which If I remember right was supposed to lead to

5.7 million homes sales in 2014 for Existing homes, it = 4.93 million
25% sales growth in new homes sales = 1.2% most likely be negative fter revision

Also, we are working off a low base and inventory was up and rates were lower all year last year. So, you even had the why factors to housing's favor

Math is Math.... the rest is story telling. However, when you hit century lows in housing demand metric. "This means in the 21st century these numbers were the worst on record" You will have some room on the YoY metrics. It's very hard to go below 21st century back to back years at this stage of the cycle unless peak affordability thesis is in play. ;-)

Once get let me bring you math, data and facts

These data points are to here to show you why housing demand has been soft for years.

Causation, Correlation & Representation thesis. This is year 7 now of the cycles are rates are near cycle lows. All I am applying in the article that if you can't get any growth year over year when you hit 21st century on purchase applications which I am saying will happen, then you need to discuss peak affordability thesis

What if i'm colorblind?
And do you provide wheelchair access?

Logan Mohtashami says

Once get let me bring you math, data and facts

SoftShell says

What if i'm colorblind?

And do you provide wheelchair access?

Numbers have no color ;-)
Numbers are closest thing we have to handwriting of God!

Here is a another model I tell economist

Demographics

Age 23-25 are very big in the U.S.

If their own models show marriages happening 28-31 and historically people buy 3.5 -6 years out from marriage then this demographic pool is 7-10 years away from having the capacity to own in big numbers with the dual income factor model.

Have to give the kids time to grow, I never understood all the nirvana around first time home buyers since 2010

Call it Crazy says

Even historical low rates haven't stopped the decent...

Where's the "growth" going to come from unless the .Gov pulls another rabbit out of it's hat?

The only growth is in rental housing. Apartments, townhouses, trailers, etc.. Construction in the commercial rental market is strong.

bob2356 says

The only growth is in rental housing. Apartments, townhouses, trailers, etc.. Construction in the commercial rental market is strong.

We have rental construction boom as evident with the rental vacancy numbers. Here are some starts data

bob2356 says

Construction in the commercial rental market is strong.

Usually this is a lag to residential, empirically speaking. I wonder if the up tick you are talking about is more an indicator of cheap money seeking a yield?

Which is specific to certain types of commercial construction.

indigenous says

bob2356 says

Construction in the commercial rental market is strong.

Usually this is a lag to residential, empirically speaking. I wonder if the up tick you are talking about is more an indicator of cheap money seeking a yield?

You can't have a yield unless you fill the units. I do think the under 40's are more urban and much more willing to rent than the totally suburb oriented boomers ever were. The movement back to the cities doesn't seem to be slowing down at all. Which leads to the question of who the boomers are going to sell their houses to in order to retire? I've been wondering that for 30 years.

Even with QE and ZIRP

SFace says

Sorry, your graphics make no sense. It looks pretty but says absolutely nothing. When it says nothing, you know it is wrong. A bunch of confusing, circles, colors and death trap is just visual crap.

He is right, Logan. A picture is worth a thousand words, not a hundred thousand words. Keep it simple.

Strategist says

He is right, Logan. A picture is worth a thousand words, not a hundred thousand words. Keep it simple.

I said it as simple as I can

Math is Math.... the rest is story telling. However, when you hit century lows in housing demand metric. "This means in the 21st century these numbers were the worst on record"

This was my interview on T.V. where I am told to keep it simple

It doesn't get much simple than this video

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

Logan Mohtashami says

Nobody so why even have a 40 year amortization loan unless you want to hide the true cost of housing.

The government caught on to this scam and stopped it.

You're basically renting from the bank at that point. What's the problem with that?

tatupu70 says

You're basically renting from the bank at that point. What's the problem with that?

It creates a false sense of cost of shelter, this is why the U.S. government stops this. It allows to the added inflation cost of a home. There wasn't even any debate on this issue either, everyone knew the 40 year was a racket and not even the higher end bankers have brought this back for their wealthy clients.

I don't believe I saw one person fight for this either

Logan Mohtashami says

It creates a false sense of cost of shelter, this is why the U.S. government stops this. It allows to the added inflation cost of a home. There wasn't even any debate on this issue either, everyone knew the 40 year was a racket and not even the higher end bankers have brought this back for their wealthy clients.

I don't know if it's good but I don't see it as bad either. What's the racket? Why would it add to the inflation of a home?

tatupu70 says

I don't know if it's good but I don't see it as bad either. What's the racket? Why would it add to the inflation of a home?

It lowers the cost of a home, allowing more people to buy. It wasn't a very popular loan, except for those who couldn't afford a 30 year loan. As soon as they did the research on it, they killed it.

If you can't own a home with a 30 year amortized loan, probably shouldn't be buying a home

Logan Mohtashami says

It lowers the cost of a home, allowing more people to buy. It wasn't a very popular loan, except for those who couldn't afford a 30 year loan.

And that's bad, why?

Logan Mohtashami says

If you can't own a home with a 30 year amortized loan, probably shouldn't be buying a home

Again--why? People who can't afford homes, rent. How is a 40 year loan worse than renting?

tatupu70 says

Again--why? People who can't afford homes, rent. How is a 40 year loan worse than renting?

Nothing wrong with renting.

Also, the credit quality of 40 year amortization loans were awful. Talking about the bottom of the economic food chain.

Also the debt structure for some of these loans were fixed for short period as well.

It really wasn't a popular loan except for the poorest income and credit quality buyer

That's why not even the banks cared about losing it

bob2356 says

You can't have a yield unless you fill the units.

I did not say it would be a good investment, in Austrian Terms a malivestment. Although a lot of it is healthcare related so it may work out well.

But the smaller commercial is a different story.

bob2356 says

Which leads to the question of who the boomers are going to sell their houses to in order to retire?

Chris Martenson talks about that as well. The City Newspaper ran an article a while back IIRC by Joel Kotkin, in which he stated the real growth for the west will be in Utah & Colorado, as young families can buy there. I guess jobs will be created there as well?

Logan Mohtashami says

Nothing wrong with renting.

Also, the credit quality of 40 year amortization loans were awful. Talking about the bottom of the economic food chain.

Also the debt structure for some of these loans were fixed for short period as well.

It really wasn't a popular loan except for the poorest income and credit quality buyer

That's why not even the banks cared about losing it

Sure--I understand that. Banks probably wouldn't want to make those loans to the folks that would apply. I just don't see why the US government would care.

tatupu70 says

Sure--I understand that. Banks probably wouldn't want to make those loans to the folks that would apply. I just don't see why the US government would care.

Some of those loans were sub prime debt structure nature types of products.

Fixed at a short term rate, then exploding higher. Some were interest only loans for a period of time which also has been banned by QM

So there is more to the story that a simple 40 year amortization loan like a 30 year amortization loan

Speaking of Which this was this posted against on the internet

http://www.housingwire.com/blogs/1-rewired/post/32816-tweets-show-everything-wrong-with-cnbc-housing-optimism

Call it Crazy says

Because they are currently holding the bag on the existing sub-prime loans now!

Whether or not this is true is irrelevant.

tatupu70 says

Whether or not this is true is irrelevant.

Also remember that lawsuits can come against the U.S government and banks from people who got sub standard loan products, in many suits for predatory lending there were 40 year loans giving.

So, the government and banks don't want anything to do with that type of loan. This is why under law you bank can't get legal production if you do a 40 year amortization loan

This is another factor why the U.S government and banks no longer do 40 year amortization loans

Logan Mohtashami says

Also remember that lawsuits can come against the U.S government and banks from people who got sub standard loan products, in many suits for predatory lending there were 40 year loans giving.

So, the government and banks don't want anything to do with that type of loan. This is why under law you bank can't get legal production if you do a 40 year amortization loan

This is another factor why the U.S government and banks no longer do 40 year amortization loans

Is that because of the duration of the loan, or the amortization? I wouldn't think a straight 40 year loan would give rise to any lawsuits or predatory lending lawsuits.

tatupu70 says

Is that because of the duration of the loan, or the amortization? I wouldn't think a straight 40 year loan would give rise to any lawsuits or predatory lending lawsuits.

- Stated income loans
- Fixed for a 5 -10 year period and then amortized for 30 years after

I have never seen a pure 40 year amortization loan, who would really lend out money for 40 years fixed.

Also, 40 year loans had higher rates than traditional mortgages due to the amortization hit on pricing

It just wasn't a happening product. Not even the tight lending group is asking for that loan to come back, it has never been mentioned by any pro housing groups

Call it Crazy says

Does the names Fannie Mae and Freddie Mac ring any bells?

Yep. Still not relevant to the discussion. We're talking about private banks making loans.

never trust realtors

Call it Crazy says

Strategist says

SFace says

Sorry, your graphics make no sense. It looks pretty but says absolutely nothing. When it says nothing, you know it is wrong. A bunch of confusing, circles, colors and death trap is just visual crap.

He is right, Logan. A picture is worth a thousand words, not a hundred thousand words. Keep it simple.

No he's not... If he can't read and understand Logan's chart, maybe he needs a six year old to explain it to him.

I bet even Logan gets confused by his own charts.

tatupu70 says

Logan Mohtashami says

If you can't own a home with a 30 year amortized loan, probably shouldn't be buying a home

Again--why? People who can't afford homes, rent. How is a 40 year loan worse than renting?

Interest only loans are even more like rent. If you plan on moving in 5 years, interest only loans are not bad.

Strategist says

I bet even Logan gets confused by his own charts.

I post about 10-25 charts a day from all areas of economics. The Housing Charts are the easiest ones.

Come to my facebook page, I talk about all economic data her and abroad

https://www.facebook.com/Logan.Mohtashami

Logan Mohtashami says

Strategist says

I bet even Logan gets confused by his own charts.

I post about 10-25 charts a day from all areas of economics. The Housing Charts are the easiest ones.

Come to my facebook page, I talk about all economic data her and abroad

https://www.facebook.com/Logan.Mohtashami

He he he. I just tried, and they want me to log into Facebook. I'm not on Facebook, but i'll make up a name and join.
By the way, I was an economics major, beyond masters. I love graphs, I even dreamt graphs. :) But now I am getting old. :(

If you like economics and historical photos in the evening that is what you see everyday

Logan Mohtashami says

Strategist says

I bet even Logan gets confused by his own charts.

I post about 10-25 charts a day from all areas of economics. The Housing Charts are the easiest ones.

Come to my facebook page, I talk about all economic data her and abroad

https://www.facebook.com/Logan.Mohtashami

You are cool, Logan. :)

Logan Mohtashami says

What, no hot chicks??

My wife would say, how come you a lot Hot real estate female friends

Logan Mohtashami says

If you like economics

You sick bastard...

Logan Mohtashami says

Logan Mohtashami says

What, no hot chicks??

My wife would say, how come you a lot Hot real estate female friends

Just tell her in Farsee..."no one as beautiful as you, Jaan" And then take her to that restaurant off Culver in Irvine that has belly dancing.....Caspian.? Women fall for it every time.

Strategist says

Caspian.

My wife is American and she has been to Caspian more than me and I lived in Irvine since 1989 and have been there just twice in 26 years.