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2014 Inventory up
Up isn't the same as unlimited. It's up from low levels and still BELOW what most people believe is equilibrium. That's why prices are rising.
Like I said
You never provide any data, charts, or information
You have an economic assumption theory that the data doesn't agree with but in your own mind you believe your right
To that I can't change your thinking nor will I try because men like you never bring
Math, Data, Facts into the equation
Your economic assumption theory's do have
limf(X) =sky
x-aIt's ok...
Last 20 years I have seen people shun away from math, facts, and data and live off of spin .... your sentence structure speech patterns, no different.
That's completely fine everyone has to have their own thing
Mine, simply is
Math, Facts and Data matter, numbers don't lie... people do, however.
I do provide charts and evidence, when I believe that someone is wrong about data or facts. In this case, you are interpreting the data incorrectly. There's no need for me to post the same data again in order to show you how you are misinterpreting it.
Please tell me specifically which economic assumption of mine is not supported with the data. I'm all ears.
You love to pretend that you're the only one that like data and facts. I can assure you that I am at least as interested in data and facts as you. I just choose to let the data speak before I draw any conclusions. You don't. So, again--please tell me which economic assumption of mine is not supported with the data. I've already told you 2 of you assumptions that are incorrect and not supported with data.
There's no need for me to post the same data again in order to show you how you are misinterpreting it.
I have never seen you post any data ever
Please tell me specifically which economic assumption of mine is not supported with the data. I'm all ears.
That rates don't matter...
I have never seen you post any data ever
You obviously haven't read many of my posts
That rates don't matter...
Now that's funny. On this very thread, another poster has shown you the data. I posted something similar a long time ago. I'll try to find the old post and copy it here too.
I've already told you 2 of you assumptions that are incorrect and not supported with data.
This kind of statement is exactly what I am talking about ... seriously.. there are plenty of housing bear trolls that you will have a better discussion with than me.
All I show is data.. if America was watching our conversations what do you think they would say
The man hiding behind a fake name who presents no data is trying to talk his way with an economic assumption theory
The man who doesn't hide behind a fake name, writes about housing, speaks to economist and gets invited to economic conferences actually presents a very simple
#causation
#correlation
#Representation
factor model
Come one, you really think this game your playing works on people
You had one aggressive move in rates in this cycle and that changed the PITI factor so much that everyone whiffed on their 2014 sales call
The cycle wasn't ready for higher rates and that created the first ever bear market on purchase applications in an up cycle ( year 6) ever recorded since the data was collected
In fact the reason they gave for the excuse for the decline curve shift in demand
"A sharp move in interest rates"
This is from the number #1 Housing analyst in America too
"I think nirvana took a pause," Zelman told CNBC on Wednesday. "During that time home prices were surging and we had very attractive affordability, and a few months after I was on we saw rates surge about 100 plus basis points and we saw a pause.
The consumer was rationally responding to the surge in prices and the backup in rates."
All I show is data.. if America was watching our conversations what do you think they would say
The man hiding behind a fake name who presents no data is trying to talk his way with an economic assumption theory
The man who doesn't hide behind a fake name, writes about housing, speaks to economist and gets invited to economic conferences actually presents a very simple
I'm commenting on the data you already posted. Do you really need me to repost it? Why?
You had one aggressive move in rates in this cycle and that changed the PITI factor so much that everyone whiffed on their 2014 sales call
I thought everyone has whiffed on their sales calls for 3 years running? And it was because prices are too high-isn't that your thesis?
Regardless, if your argument is that spikes in interest rates can have short term effects on demand--I will grant you that is possible. But, looking at historical data over long periods, there is no correlation between rates and demand. Hell, even after the spike you posted above, rates were still very low.
I'm commenting on the data you already posted. Do you really need me to repost it? Why?
This is your tactic,
.....
This is just a guess
You're a female, from Hawaii or the islands and I am going to say you're a baseball fan because you like stats?
How did I do?
See, I come with data first ... and then show the relationship factor
You just come out of no where
Seriously, as a friend, I am telling you, you say things that make no sense what so ever.
It's ok, because you're not an economist, you're not a housing analyst, you don't write about housing and you hide behind a fake name which means it's ok because you don't need to be right
This is all fine, nothing wrong with what you're doing
However, you say things that just aren't realistic
Hint: Narcissism is your enemy not your friend
I myself am only bounded by math, facts and data if I said the things you have said on Patrick I would be laughed at. It's not your fault, this isn't what you do for a living.
However, don't think for a second this mickey mouse stuff works on someone who lives off numbers. :-)
What was the demand curve during the lowest interest rate cycle ever in 10's
Here
Math
Facts
Data
Matter.... you have to know why something happens... that's the only way you get to the truth
Seriously, as a friend, I am telling you, you say things that make no sense what so ever.
However, you say things that just aren't realistic
Instead of continuing to repeat this nonsense, why don't you just have a discussion about the data and interpretations? You always want to distract trying to make it personal, either about me or you. Let's just discuss the data.
So, again, what am I saying that is not realistic? What am I saying that makes no sense.
In case you forgot, here's what I'm saying. If you look at historical data, there is no correlation between interest rates and nominal house prices. This is because incomes are the main driver in house prices, and income is strongly correlated (negatively) with interest rates. That relationship overrides the expected dependency between prices and interest rates. So, what doesn't make sense there?
Instead of continuing to repeat this nonsense, why don't you just have a discussion about the data and interpretations? You always want to distract trying to make it personal, either about me or you. Let's just discuss the data.
Your tactic... it doesn't work with me
If you look at historical data, there is no correlation between interest rates and nominal house prices
Another tactic, change subject, I am talking about demand curve "COME ON" seriously, I have home prices going up for years now...
This tactic you do doesn't work on me...
Miss ... I presume...
My lady, you're dealing with someone who looks at every single data possible every day of his life.. Not just housing but every economic indicator here and over seas
When I post demand curve numbers that means demand curve not prices... Really....come on my lady you know better....
Since inventory levels broke under 6 months that gives pricing power in almost every cycle unless the inventory level shifts above 6 months or you get front loaded with distress sales
We have inventory under 6 months
We have traditional sales rising and distress sales falling
With unemployment claims hovering at a 15 year low there is no recession sign what so ever
My lady I am trying to make the point that I am not the person you should be trying these tactics with... There are plenty of people here that would love to go back and forth on non mathematical statistical trends
Your tactic... it doesn't work with me
lol--you're kidding, right? You do it again on the last post!
Miss ... I presume...
Another tactic, change subject, I am talking about demand curve "COME ON" seriously, I have home prices going up for years now...
OK, let me remind you what we were talking about:
Logan Mohtashami says
Please tell me specifically which economic assumption of mine is not supported with the data. I'm all ears.
That rates don't matter...
Do you remember now?
Yep, but to see if there's a correlation you need to look at a time period when rates are rising to see if prices fall. Not to mention that prices fell significantly during as rates fell in the late 2000s. Doesn't look like a correlation to me.
lol--you're kidding, right? You do it again on the last post!
My lady... seriously... this tactic isn't working...
I am talking about main street America demand curve and how it's been a renting cycle and you're talking only about nominal prices and I just gave you
my thesis on what to do look for on prices and why it's increasing
Distress sales only come in recession my lady
Come on....let it go.... So many more people you can chat with that are better suited for you style of debate
On another level.. in the next recession I don't believe you're going to see a massive correction in prices because of the lack of speculation in this cycle on non capacity owning debt
My lady, still, I got nothing but love for you as always I do enjoy our chats
The past 25 years isn't long enough for you to see a trend??
To see a trend, yes. To attribute causation, clearly not.
You want to cherry pick a small segment where artificial and unreaslistic financiing took place which caused the bubble to pop as your argument?
Of course. I let the data speak for itself.
Of course it doesn't, that would blow up your false narrative that you've spewed through out this thread.
You might as well say pork bellies are correlated to low interest rates or beef prices. Both have risen over the last 25 years too.
In order to show correlation, you must show it holds during both up and down periods.
In case you forgot, here's what I'm saying. If you look at historical data, there is no correlation between interest rates and nominal house prices. This is because incomes are the main driver in house prices, and income is strongly correlated (negatively) with interest rates. That relationship overrides the expected dependency between prices and interest rates. So, what doesn't make sense there?
Yep, but to see if there's a correlation you need to look at a time period when rates are rising to see if prices fall. Not to mention that prices fell significantly during as rates fell in the late 2000s. Doesn't look like a correlation to me.
Tatu does have a point with his second comment. When interest rates rose in the late 70's, it was due to inflation. Real Estate is a hedge against inflation. The "real" interest rates were not necessarily high, therefore real estate prices would move up.
If Tatu is stating home prices cannot increase with falling interest rates, that would be wrong, as both, interest and wages determine affordability of a home.
If Tatu is stating home prices cannot increase with falling interest rates, that would be wrong, as both, interest and wages determine affordability of a home.
I think I've been pretty clear with my statements. There is no correlation between interest rates and housing prices.
There is, however, a strong correlation between income and house prices.
If Tatu is stating home prices cannot increase with falling interest rates, that would be wrong, as both, interest and wages determine affordability of a home.
I think I've been pretty clear with my statements. There is no correlation between interest rates and housing prices.
There is, however, a strong correlation between income and house prices.
Question for you. If the 30 year fixed rate mortgage jumped to 12%, with no change in income or inflation, would real estate prices be negatively affected?
Question for you. If the 30 year fixed rate mortgage jumped to 12%, with no change in income or inflation, would real estate prices be negatively affected?
I would expect so. Empirical correlation doesn't worry about hypotheticals though--it's a simple calculation based on historical data.
Speaking of which quoted on USA Today today
"Renting the New American Dream"
In regard to rates and inflation. All we have is pocket inflation and debt has to be serviced at lower rates because the demand curve is just dreadful for most of America in this cycle.
Even with the lowest interest rate curve since 1941-1945 you have the weakest demand from main street America.
But.. and this is the big but.. you have the strongest demand curve ever from wealthy Americans, wall street, foreign buyers, cash buyers, fund buyers, re mod buyers ever seen.
Speculation factor is very little here because there is no way for main street to speculate in big numbers and this is a very good thing for this country. We should proud as Americans to not allow garbage back into the system
Net worth which is highly top end heavy .. really the 1% is getting screwed by the 0.01%
#Globalization
#Technology
#Debt
#Demographics
The good part about America is that we do have a young workforce coming on-line soon and we have 2 solid decades plus of working force that will get better wage inflation that what we saw in this cycle... this is more a 2020-2024 story line
Year 7 of the cycle... 2-4 years left before the next recession .. so the next recovery cycle will look better as prime working age workforce is now growing
There is, however, a strong correlation between income and house prices.
Has not recovered to pre cycle recessions highs (variables in these equation)
New home prices
Nominal way over the pre bubble peak... adjusted to inflation we just past it last month
Existing home prices
This is what happens when you have 30% plus cash buyers in an economic cycle, 20% above historical norms and over 50% of all homes being bought by the reach.
I don't like to use the term bubble for home prices in this cycle, just major disconnection from main street America and this is why the demand curve has been the worst we have ever seen from main street but the strongest demand curve from wall street, rich, Foreign buyers, hedge funds... this even with the lowest rate curve on 10's since 1941-1945
In reality and in lending terms the size of the debt (PITI) inflation model... this is the missing algorithm PITI +DTI +LTI = (HC)
Inventory very key on home prices because the asset itself has capacity to grow in asset value ... like all debt instruments the subsidization factor for housing has been very helpful for growth in nominal price values as well.
So there are legs to grow as long as inventory stays below 6 months and there is a lack of distress sales in the market, both are here to stay this year and even next year as well
The charts above dispute that....
No they don't. I don't know how much more simple I can make this for you.
Now, notice what housing prices did during high the inflation times of the mid/late seventies through 1982. Housing went up. A lot. Then it actually leveled off as interest rates were falling after 1982 before picking up again. Tell me how that is a correlation. Interest rates low--sometimes prices rise, sometimes they fall. Interest rates high, housing prices rise. Where exactly is the correlation there, again??
Strategist says
Here for you buddy starts at 2:21
TOL company was my point but tried to get the builders index there for you
Strategist says
Here for you buddy starts at 2:21
TOL company was my point but tried to get the builders index there for you
Hey, that was pretty cool. Thanks.
I liked that guys answers. The 10 year yield shoots up, but the homebuilders go sideways. :) It's as if those ITB and XHB stocks are just waiting to get the expected higher interest rates out of the way before they too start moving up. Was stimulating. :)
Hey, that was pretty cool. Thanks
Lets say I was paid pusher for builders... the best thesis I would use is this
Adjusting to population growth sales are so historically low that the builders aren't pricing in the next waive of the housing buying cycle come 2020-2024 time frame. TOL brothers 2.5 soft trend is due to a lack of dual income buyers in the system
That's the best I can do... shifting the thesis from housing is nirvana to the normal trade cycle which makes the builders a good trading channel story until the front end demand curve shows up
Key with builders in all cycles, got to get in early... late recession cycle trail end demand curve will start to swing positive.
Here in the U.S. is March of 2009 when the data come through positive and then the jobs picked up positive in early 2010
Key with builders in all cycles, got to get in early... late recession cycle trail end demand curve will start to swing positive.
Here in the U.S. is March of 2009 when the data come through positive and then the jobs picked up positive in early 2010
Home building cannot get any lower. There is only one direction for it to go, and that is up. That makes home builders and their corresponding ETF's the best and the safest investment ever.
That makes home builders and their corresponding ETF's the best and the safest investment ever.
There is only one direction for it to go, and that is up.
Did you see those permits number today... Holy rental cycle batman... wow
I love this graph. A picture is worth a thousand words, but this graph is worth a thousand pictures.
Look how high housing starts went in 1972. Even the recession that followed due to the first oil crisis did not kill housing starts as it did in 2009.
Even during the 17.5% mortgage rates of 1981 housing starts were better. We need more homes. There aren't enough caves for everyone.
Gentlemen, we are about to embark on a massive building boom.
Even during the 17.5% mortgage rates of 1981 housing starts were better. We need more homes.
No, we need more people who can afford and are able to BUY those homes...
People could afford 17.5% mortgage rates, but not 4%?
If they can't afford to buy, they will rent from a landlord who can afford to buy. Either way, that home MUST be built.
People could afford 17.5% mortgage rates, but not 4%?
Forget the nominal rate as the variable factor model, that has led to nothing but disaster sale estimates and the biggest misses on sales estimates we have seen in long time
PITI + DTI +LTI = (HC)
There is no
limf (x) =sky
x-a
Model
debt size grows the capacity to handle that gets challenged
Causation
Correlation
Representation
3 (X)
1.
Finally number 3
Horrid net demand from new homes which are tilted to the wealthy buyer
Even with an extreme high cash buyer profile and lowest rate curve post WWII
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#housing