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BTW, how's Illinois??
cold.
Call Crazy, if you are done with the shovel I sent you, can you be kind enough to forward it to tatupu? Thanks.
This I agree with--inventory and change in inventory is the key metric.
Curious, I have asked this question of housing bulls for years and the answer I get is the main reason why I believe that this certain group of people really don't care about math, data and facts on internal net demand.
See, during 2003-2006 when I talked about MI2MP models, they just ignored it and they said it doesn't matter, prices are going up and that's all the matter, forget about real demand
2013-2015 I talk about the MI2MP models, they just ignore it and they say it doesn't matter prices are going up and that's all that matters, forget about real demand
15 years I have watched this kind of thinking and its amazing.
The sentence structure, the similarity to tone and actual wording of pro active statements is always the same.
It's the nature of the beast
One set has data
The other set has an economic assumption theory and doesn't provide data nor a reason for the actual mathematical fact of the other data line using internal net demand reads.
Then you show a long term chart of the equation and even then it doesn't matter even more. I find this fascinating
Call Crazy, if you are done with the shovel I sent you, can you be kind enough to forward it to tatupu? Thanks.
He should never left the paradise of New Jersey.... He's on his own now!!
Sorry Tatupu, I tried my best to help you. Move to Sunny California, and save the airfare every time you visit Disneyland.
Still the best is when I show this chart and the answer is ....There is nothing wrong with this!
Still the best is when I show this chart and the answer is ....There is nothing wrong with this!
Except........what the hell is that chart saying.
Except........what the hell is that chart saying.
Thanks, now I know what it's saying. It's all gonna be back to business as usual.
Except........what the hell is that chart saying.
The pro housing group had a false sense reality in terms of main street America owning the debt of housing
Now I take all economic data from 1996-2007 with a grain of salt because of the financial bubble component factor. Now this doesn't mean everything was juiced but the housing market expanded from 1996-2007 in fashion that it couldn't possibly be continued. I think we can all agree on that.
So, now without a real financial bubble factor in this cycle, we are back down to fundamentals and who can or can't own the debt.
Very hard to have a re leverage of debt from a sector where the bubble debt had to be de leveraged, it takes a lot time for this to work itself out. The one problem we had in this cycle was the massive price gains we saw from 2012-2015 and it is still continuing as we speak.
If the buyer profile was different and we had more long term sustainable buyers in play then it wouldn't be so bad as we would just chalk it up to mild demand recovery. However, the strong new demand has been from a buyer that doesn't have a good track record of staying in the market place for a long time at 27%-33% of all sales
The graphic is a visual disaster and meaningness. The box is just a visual trick for the uninformed.
Low ownership rate is a bullish indicator. There, as simple as that.
I like the historic house price vs median income historic graph. I'm wondering if you'd have something adjusted for inflation.
But most importantly, if we are really in a secular stagnation, and interest rates stay low for long, wouldn't we expect the slope to change as a trend?
Curious, I have asked this question of housing bulls for years and the answer I get is the main reason why I believe that this certain group of people really don't care about math, data and facts on internal net demand.
See, during 2003-2006 when I talked about MI2MP models, they just ignored it and they said it doesn't matter, prices are going up and that's all the matter, forget about real demand
2013-2015 I talk about the MI2MP models, they just ignore it and they say it doesn't matter prices are going up and that's all that matters, forget about real demand
They care about math, data. and facts, but they pick the ones that are useful--prices went up in those time periods. What good is a model predicting the exact opposite of reality?
One set has data
The other set has an economic assumption theory and doesn't provide data nor a reason for the actual mathematical fact of the other data line using internal net demand reads.
Last I checked, inventory numbers are data. So, in reality, both sides have data. I choose to follow data that more closely correlates with changes in price.
The graphic is a visual disaster and meaningness. The box is just a visual trick for the uninformed.
Low ownership rate is a bullish indicator. There, as simple as that.
As always no matter what the data shows you have never said anything bad about the housing market in terms of real net demand and trust me you never will because math, data and facts don't matter to someone who never looks at data. Trust me, I understand this, it is what it is
Last I checked, inventory numbers are data. So, in reality, both sides have data. I choose to follow data that more closely correlates with changes in price.
Then explain why homes sales went negative when inventory was up in 2014 and interest rates fell all year long
Like I said 2014 was the first year ever recorded in American history where purchase applications had a negative YoY print every single week of the year compared to year over year numbers and for 11 months it was down double digits
We have never seen that happen in a up cycle where inventory was up and rates went lower post WWII
So explain to me how that possibly could happen?
Then explain why homes sales went negative when inventory was up in 2014 and interest rates fell all year long
Like I said 2014 was the first year ever recorded in American history where purchase applications had a negative YoY print every single week of the year compared to year over year numbers and for 11 months it was down double digits
We have never seen that happen in a up cycle where inventory was up and rates went lower post WWII
So explain to me how that possibly could happen?
Like I said earlier--I don't care about sales volume. The only reason to follow sales volume is as a predictor of future price changes. Clearly, it failed as a predictor. That's why I choose to follow inventory.
Here' s an example as to why sales volume is a flawed statistic:
Example A: Grandma passes away and her house goes for sale. First time buyer Joe buys it. One transaction.
Example B: Grandma passes away and her house goes for sale. Jack moves up to Grandmas house. Dick moves up to Jack's house. John moves up to Dick's house. First time buyer Joe buys Dicks house. 4 transactions.
There's really 1 net new buyer in each case but there is 400% high sales volume in the second case.
If you can get 17%-27% growth in purchase applications and cash buyers only fall slightly not the 6% drop we saw in Jan then you can get over possibly 5.10 million in sales which is still very low and below the 5.5 million trend line you usually see with E. Homes sales
So far we haven't seen the growth in purchase applications, even I said we should see 5%-10% growth year over year because we hit a 21st century low last year and match that to employment to population numbers we should have some growth there because the bar is so low
However, so far it's been flat to slightly higher, have about 6 more weeks left for this metric to show what spring demand is
There's really 1 net new buyer in each case but there is 400% high sales volume in the second case.
Wow
Brother this equation is for you then
lim f(x)=sky
x-a
Like I said earlier--I don't care about sales volume
We just work from different worlds then, because I have to use all variable factors for housing.
I can't be a just a price guy. I remember all the price people back in 2003-2006 and a lot of the same people those who are left are saying the same
thing from 2012-2015
However this cycle is unique all the demand is real, the owners do have the capacity to own the home. The cash driver is the biggest variable factor because it amounts to 1 million home sales for E. Homes
New home sector has a much bigger economic impact so that is always considered more important than existing homes especially now people aren't cashing out on their homes to consume on debt
We just work from different worlds then, because I have to use all variable factors for housing.
That's not really true. You use the variables that you think are important--there are unlimited variable factors. Clearly you don't use them all. I'm just pointing out that some of them are less important than you think.
Think about this--why does anyone care about sales volume?
Think about this--why does anyone care about sales volume?
Here is an example just now
The #housing recovery is faltering...construction and new home sales remain weak. S&P's Blitzer
I understand why people like yourself don't like math, data and facts. I totally understand why in your mind there is nothing wrong with the housing market.
All that matters is price. I remember 2003-2006 very well and the similar wording of housing
However, when everyone else, The Fed, Economist , Warren Buffet and many others are concerned about the lack of growth demand.. just maybe .. maybe there is something to
Math
Facts
Data
It doesn't matter, none of this data matters to that group that just car about price, I have no doubt
I totally understand why you don't see anything wrong with the housing market... ;-)
Just look a longer term trend
This is what I wrote back in Dec 2010
Consequences of an unstable market.
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 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?
I understand why people like yourself don't like math, data and facts. I totally understand why in your mind there is nothing wrong with the housing market.
All that matters is price. I remember 2003-2006 very well and the similar wording of housingHowever, when everyone else, The Fed, Economist , Warren Buffet and many others are concerned about the lack of growth demand.. just maybe .. maybe there is something to
Math
Facts
Data
Logan--enough with this nonsense. I love math. I love data. I love facts.
But I'm smart enough to be able sift through mountains of data and facts and understand which ones actually are telling me something useful. You don't seem to be able to do that. The point of all the data and facts is to PREDICT something in the future. You don't seem to get this. You think that making a bunch of lines in different colors makes you look smart....
Maybe it does to someone who is easily impressed. But I want to see data that correlates with something over a decent time period.
I totally understand why you don't see anything wrong with the housing market... ;-)
Again--so how does this chart predict rising prices from 2012-1015?
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?
Yes. That also explains why median home price increase can outpace median income rise: if only the top 1/4 of the population is buying houses, the median of the top 1/4 may well be experiencing faster median income increase than the general population, thanks to Obama administration government intervention policies exacerbating income and wealth inequality.
Again--so how does this chart predict rising prices from 2012-1015?
Great example right here. You don't care about anything but price, even when sales turn negative in a year where we should have seen 20%-30% growth
However just look when the first level of deviation rise and that was with near 1 million new homes sold
Right here it's a perfect reflection of the market place but you can't see it because you're stuck on only one variable price
Look at 2003-2006 and what happened to prices then?
Now you don't even have 1 million homes sold like we did in 2006 you're hitting a soft patch at 440K with rates at 4%
Now new homes are the most expensive on record? This was the main reason why sales were negative
They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down
That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market
Purity of mathematics creates this divide!
Kudos, on this one, this is the best example you have given me
You think that making a bunch of lines in different colors makes you look smart.
Numbers can't lie
People, poets, politicians these are lies
Numbers are the closest thing we have to the handwriting of God ;-)
Logan--enough with this nonsense. I love math. I love data. I love facts.
If you truly did love numbers then you would see why there is an issue with the housing market
You can't deviate from the economic equilibrium of your surrounding group of demand drivers
When condo purchases in the data pool are replaced by apartment building purchases, the average and median transaction prices can increase even without any quality improvement in the housing stock being transacted. Yes, transaction unit volume drops in that product mix change.
Again--so how does this chart predict rising prices from 2012-1015?
See, the best thing here is that we both agree home prices are going to rise
But I see net demand issues happening where it's not on your radar really
That is what makes a market place, that is completely fine.
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 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?
That IMO is on the mark. IMO the overarching reason is simply off-shoring of jobs, secondly it is because of demographics, thirdly it is because of mercantilism, fourthly it is because of automation.
But the insidious reason that may have more to do with than anything is the Fed preventing an organic recovery by TARP and QEs and the Greenspan put which is seen in the velocity of money being at an all time low.
Great example right here. You don't care about anything but price, even when sales turn negative in a year where we should have seen 20%-30% growth
Again-why should anyone care about volume if it's not a leading indicator on price? And who says what we "should" have seen?
They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down
That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market
Purity of mathematics creates this divide!
Kudos, on this one, this is the best example you have given me
No problem. I think you'll find 99%+ of the people who follow the housing market are concerned with price. So, yes, that's the variable that I consider the most important. Other variables are tracked and reported because there is a belief that those variables will affect price in the future.
They will show some more growth in 2015 because the bar is too low but if all your care about is price then you can see the trend that pricing power is slowing dwindling down
That's not a big deal in my mind I think that is the most bullish thing that can happen but right here is the best example why someone like yourself doesn't see anything wrong with the housing market
Please don't characterize my views on the housing market. I think there are a lot of things wrong right now--and the housing market just reflects the broader issues with the US economy. But the point I'm making is that most of your charts show an overpriced market in 2012. Yet, prices went up for 3 straight years. Obviously those charts are not good predictors of future market behavior.
Facts are neutral--it's the interpretation of those facts that is the important thing. You haven't shown an ability to interpret facts and data to make good predictions on the future. If you can't do that it doesn't matter how many graphs and charts you can make or how many colors you use on them. They're worthless.
Numbers can't lie
People, poets, politicians these are lies
Numbers are the closest thing we have to the handwriting of God ;-)
Yep--but you aren't just posting the raw data. You are making graphs that are reaching conclusions. I don't fault your numbers. Just your interpretations.
If you truly did love numbers then you would see why there is an issue with the housing market
You can't deviate from the economic equilibrium of your surrounding group of demand drivers
You never answered my question. You say we can't deviate from the equilibrium but we have for 3 years running.
And I ask--at what point do you reevaluate your theories? How many years of them not reflecting reality before you begin to question them?
Yep--but you aren't just posting the raw data. You are making graphs that are reaching conclusions. I don't fault your numbers. Just your interpretations.
Like I have said over and over again
You can't help yourself, in your mind there is nothing wrong with the housing market. I get it I have come to realization that there are a certain group of humans that
Math, Facts and Data don't matter. Even Janet Yellen just talked about the Sluggish Housing market but in your mind math, data and facts don't matter
You never answered my question. You say we can't deviate from the equilibrium but we have for 3 years running.
Again I have given you the same mathematical model to show you why home prices are rising and you don't even remember it
You don't care about math, facts and data and even with the mathematical model to show you why home prices are rising you have already forgotten it. It was written above.
And I ask--at what point do you reevaluate your theories?
Trend data is monthly and always has to be looked at. None of this matters to someone like yourself because
Tatupu70 doesn't believe there is anything wrong with the U.S housing market something that everyone else agrees that there is a demand problem
It's what we called economic narcissism, even when all the data shows a demand issue a single person can create a theory that there is nothing wrong with the housing market.
This almost borderlines of economic moral insanity
Which is 100% normal because I have seen this type of human behavior before where math, facts and data don't matter to this certain group
Remember if cash buyers went back to their normal historic %
Both 2012, 2013, 2014 and most likely 2015 would be the lowest level of total sales in the Great Recession
This is a mathematical fact, your demand drivers are the Rich, they have given a great cushion even though total sales have been soft.
There is no way around it, to deny this is to deny numbers itself. Much like the demand during the housing bubble was fake in this cycle, it's been the Rich buying with cash
None quarter asked none taken, this is the reality of this housing cycle
Once mortgage demand grows then you have a more normal housing market and even these low level of total sales wouldn't matter as much
Here is a stat
Back in 20000
EHS was 5.2 million
We had 5.5 million less people working back then
Interest rates were at 8%
2014
EHS sales closed a 4.93 million
We have 5.5 million more working than the year 2000
Interest rates range was from 4% - 4.5%
And we had a 20% above historical norm of cash buyers in 2014
Even with all that sales came in negative in year 6 of the economic cycle which had the biggest job growth monthly avg since the year 1999 and biggest private monthly
job creation since 1997
Math is Math... the rest is storytellig
You can't help yourself, in your mind there is nothing wrong with the housing market. I get it I have come to realization that there are a certain group of humans that
Math, Facts and Data don't matter. Even Janet Yellen just talked about the Sluggish Housing market but in your mind math, data and facts don't matter
Logan-- Why do you keep saying this?? Can you not read my posts? Do you not comprehend them?
Again I have given you the same mathematical model to show you why home prices are rising and you don't even remember it
My apologies--please repost it then and explain how it works. What model result indicates rising prices and what result indicates falling prices.
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