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Which they should. No point making anything no one wants to buy. When the demand for entry level homes start expanding, builders that cater to that market will outperform the rest.
Hold you builder trade and buy on the dips when the recession happens, you're not that old so come the next recovery cycle you will have a good starting base to work from
Yet Logan Mohtashami, an Irvine, Calif.-based senior loan manager at AMC Lending and a financial blogger at LoganMohtashami.com, saw the numbers as evidence that the housing market was in the midst of “the most magnificent renting cycle we’ve seen in a long time,†adding that builders are focusing on larger homes for financially secure consumers and not creating the starter homes that were traditionally the homeownership entry point for those in the twenties and early thirties – many of whom are now seeking out rental housing.
“We’re in year seven of a renting recovery and the builders know it,†he said. “The cycle will go on longer while builders continue building expensive bigger homes
Another good example for the crowd that says "rates don't matter"... Look at the volume of sales when rates went up to the 17% range in the early 80's. The volume was cut in half, and when rates went back down, the volume returned...
Actually, when we had essentially this same discussion on April 1, my contention (perhaps not clear) was that volume acts as a pressure relief valve to explain why prices do not drop. In other words, either price or volume will get whacked, and due to human nature and general price "stickiness" my understanding was volume did (and would) go down.
See my comment on volume, Post #82
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In any event, my attitude as one of the "rates don't matter" crowd was only in terms of price. In terms of volume, yes certainly, it matters and matters quite a bit. However, regarding the "when rates rise, prices are going to tank" thesis which was central to many many past, and some current patnetters, all I can tell you is history says you will be screwed if you are waiting for that 500K house to fall to 450K.
This aside, I appreciate you posting that graph - I was always told that volume tanked back then, but had not been able to find any data to back that up.
Today I told CNBC and The Wall Street Journal this
Here is a big call
I believe the demand curve will get better years 2020-2024. However, if we have another renting cycle in the next recovery stage. I am going to say that laws will be changed that favored home-ownership subsidizing to more rental friendly
RPD
Rental Payment Deduction
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http://loganmohtashami.com/2015/06/09/10-year-yield-having-a-2nd-taper-moment/
#housing