patrick.net

https://www.youtube.com/embed/ns4bxXfqOow

That is hard to say. You may have way more people doubling up, going back home with parents, etc.

For a massive crash in prices you need distress supply and the loan profile in this cycle has been the best I have ever seen. Not to mention 30%-40% were cash buyers, so instead of the debt on debt leverage on non capacity debt we saw in the last bubble and mega cash out refinance boom from 2004-2006 ... you saw cash buyer which eliminates the massive supply of distress homes.

Everyone who owns the debt of home can afford the payment, so it would take a job loss recession to create a distress market place. Not that home prices won't fall at some point but the level of downside is limited due to a lack of supply.

A lot people forget about the mega cash out refinance boom to lower end quality borrowers from 2004-2006.

There is a professor at the University of Chicago Booth named Amir Sufi who wrote the book "House of Debt" we have spoken at 2 housing conference together and the data line we like to show can be explained here in this video

It's primarily California data based also

9

_ 2015 Sep 16, 2:43pm

If people are well qualified, you still need new buyers. If that part of the market freezes, then what?

The demographics for home-ownership is about 5 years away from being better, so you still have price inflation with the lowest demand curve ever recorded in American history.

So, it's always a supply factor when you're talking about bubble type crashes and major distress inventory.

Look at what the inventory base looked like during the housing bubble crash

It's impossible to duplicate this with the buyer profile we have now. So we give up on housing demand for a normal type of housing debt curve, which gives you protection in the next cycle

10

_ 2015 Sep 16, 5:03pm

However, if these people suddenly cannot make their payments in a mass layoff scenario, they will walk away just like last time.

This is why you need a job loss recession.... but...

Not only do you have equity protection in this cycle, you have a 30% -40% cash buyer profile which means less distress supply in the market place. Where in the last cycle you had massive debt on debt leverage for housing.

We don't even see the cash out cycle come back in a strong way, which is very healthy in my eye,

11

_ 2015 Sep 16, 6:37pm

So, now real estate can only go up? David Lereah must have just been early? :)

Once Supply gets over 6 months, and we have a job loss recessions prices will fall, but it won't be a housing bubble crash like we saw in the last cycle :-)

12

_ 2015 Sep 16, 6:48pm

Ironman says

Are we in trouble here?

Supply is still low enough to keep prices going, plus nationally more conventional sales than distress, I know New Jersey still has a big back log of distress homes because it's a juridical state, but unless demand just falls off a cliff with higher rates, supply is still good enough for prices to rise

13

_ 2015 Sep 16, 7:21pm

Ironman says

Plus, there a still a TON of zombie houses just sitting empty year after year after year. There are a few in my neighborhood, I'm just waiting for them to finally be foreclosed and put on the market so I can buy them and flip them... but they just sit and rot...

New York, New Jersey and Florida are judicial states and have a huge back log, people living in their homes for 2-5 years for free

14

_ 2015 Sep 16, 7:48pm

. So raising near rates won't push long rates up

I talked about that in the article, that we might not even see 3% - 3.5% 10's next year

15

_ 2015 Sep 16, 8:26pm

Ironman says

I know many that have done exactly that, 4+ years mortgage and tax free!!

It was a plus if you lived in a Judicial state for that reason, paying no shelter cost for year frees up a lot $

16

_ 2015 Sep 17, 7:15am

As we can see with the housing start data, rental demand curve still has legs, but slow, slow steady rise

17

ja 2015 Sep 17, 8:13am

https://www.youtube.com/embed/M5JfpqxWDwU

Amir Sufi who wrote the book "House of Debt" we have spoken at 2 housing

IS it a good reading. What are the highlights?

18

_ 2015 Sep 17, 8:19am

ja says

IS it a good reading. What are the highlights?

Amir talks about how the risk to the economy in the last economic cycle was on those who took out the debt and a functioning debt relief system would have been useful.

Here is a video starts at 4:39 on his view

He is a big fan of my work

Amir Sufi â€@profsufi
Check out housing forecast by @LoganMohtashami -- he's been spot on in past, really understands housing market: http://loganmohtashami.com/2014/12/22/2015-housing-predictions-the-bar-is-so-low-we-might-trip-on-it/ â€¦

19

_ 2015 Sep 17, 3:31pm

I for one am totally upset for the Fed not hiking rates

http://nationalmortgageprofessional.com/news/55772/fed%E2%80%99s-refusal-raise-rates-greeted-mixed-emotions

20 anonymous 2015 Sep 17, 4:50pm

I for one am totally upset for the Fed not hiking rates

i think a lot of folks wish they actually could raise them, and a lot folks who miss the days of decades past - because there's no going back. i wonder how long it will take people to realize that the economy is like "wile-y coyote" after over-shooting a turn and running off a cliff, when he's just suspended in mid air about to realize the plunge he's about to take.

21

epitaph 2015 Sep 17, 5:13pm

I for one am totally upset for the Fed not hiking rates

Logan I really find your comments invaluable to this site and I always look forward to your insights. Why are you upset about the Fed's decision to not raise rates when none of your indicators have been met?

22

Strategist 2015 Sep 17, 5:15pm

I for one am totally upset for the Fed not hiking rates

I wish they had. The bond markets have already factored them in, but in the equities there continues to be uncertainties.
Will they...Wont they. Will they...Wont they. Will they...Wont they.
If they raised the rates by a token, the stock market would have rallied, and bond rates would have actually dropped.

23

_ 2015 Sep 17, 5:23pm

No other typeepitaph says

Fed's decision to not raise rates when none of your indicators have been met?

1. Claims are at a cycle high,
2. LEI is at the cycle high,
3. JOLTS data, Yellen favorite blew open to a cycle high at 5.8 Million

The Only thing that isn't on their metric is CPI Inflation which is 0.20% from the Fed Target

But YTD inflation rates look better than 2% even with the importing of deflation from the world weak economies

Running over 2.5% PPI & CPI mix

The average of 2Q's GDP deflator, median CPI and core CPI: 2.43%. https://research.stlouisfed.org/fred2/graph/?g=1LU7 â€¦

24

_ 2015 Sep 17, 5:25pm

I wish they had. The bond markets have already factored them in,

When I saw the 2's at 80 I thought that's it

25

_ 2015 Sep 17, 6:48pm

landtof says

i think a lot of folks wish they actually could raise them, and a lot folks who miss the days of decades past - because there's no going back. i wonder how long it will take people to realize that the economy is like "wile-y coyote" after over-shooting a turn and running off a cliff, when he's just suspended in mid air about to realize the plunge he's about to take.

26

Strategist 2015 Sep 17, 7:25pm

lan

Interesting. Even if growth is North of potential, it can still be weak. More growth would be needed to have a positive impact on employment.
No matter what, this recovery is the weakest recovery ever. Very disappointing.
As I said before....there is no strong recovery, without a strong recovery in housing.

27

_ 2015 Sep 17, 7:27pm

Interesting. Even if growth is North of potential, it can still be weak

28

_ 2015 Sep 17, 7:31pm

Logan Mohtashami â€@LoganMohtashami
Something I agree with the ChickenHawk
#FED

29

Strategist 2015 Sep 17, 7:43pm

http://www.wsj.com/articles/why-a-stronger-housing-sector-isnt-boosting-the-u-s-economy-that-much-1441646534
Why a Stronger Housing Sector Isnâ€™t Boosting the U.S. Economy That Much

30

_ 2015 Sep 17, 7:46pm

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

31

Strategist 2015 Sep 17, 7:56pm

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.
I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

32

_ 2015 Sep 17, 8:14pm

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.

I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

As always, I have been posting these chart for 6 year

The mathematical demand curve for these price homes is little, even working off a 230K low base, 7 years into the economic cycle you're fighting to get 500K total K sales

Why would mortgage buyers over pay for a new home when there is a 80 - 100K gap in median prices

The people who were saying the demand curve would be strong are missing 8 million home buyers in this cycle now... where are they?

Renting

33

_ 2015 Sep 17, 8:16pm

34

_ 2015 Sep 17, 8:19pm

Diana Olick â€@DianaOlick
#Mortgage lending standards easing according to new @FannieMae survey http://www.fanniemae.com/portal/research-and-analysis/mortgage-lender-survey.html â€¦

They weren't tight in the first place and I am reading its' not tight anymore

Lord have mercy on their souls

35

Strategist 2015 Sep 17, 8:52pm

They weren't tight in the first place and I am reading its' not tight anymore

That is where we disagree.

Lord have mercy on their souls

:)
That is where we disagree again. Atheists have no souls.

36

_ 2015 Sep 17, 9:02pm

That is where we disagree again. Atheists have no souls.

You know my degree was in history and senior thesis on the crusades :-)

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

37

Strategist 2015 Sep 17, 9:04pm

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

38

Strategist 2015 Sep 17, 9:05pm

Logan Mohtashami says

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

Tradersl@aol.com

39

_ 2015 Sep 18, 7:19am

epitaph says

Why are you upset about the Fed's decision to not raise rates when none of your indicators have been met?

LEI I was talking about

JOLTS

Claims

No time in American economic history post WWII we had these numbers on these 3 key reports and have rates at Zero when core inflation YTD is over 2% and the massive importing of deflation comes from one trick pony economies and those we a debasing currency

The best part is that the world is begging us not to raise rates, like a dog... pathetic
World economies have a demographic issue we don't have that problem here with our young work force coming on line in a few years

So I AM PISSED, their language was even worst

This is Yellen to me now

40

_ 2015 Sep 18, 12:19pm

Bethany McLean

41

_ 2015 Sep 18, 1:40pm

She is, IMO, an evil woman.

I was only talking about her looks

The entire FannieGate thing is a giant fraud I always get into twitter fights with that group

42

_ 2015 Sep 18, 4:08pm

Newbie123 says

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

Guidance and wording of global concern is new now and it's another reason why I hated that Fed meeting, one of the worst Fed meeting I have seen since I have been in finance dating back to 1996

Market should sell out because if you raise a freaking quarter when ECI wage inflation was back where it was in 2004 when the F.F. was at 1% then the Fed is saying the economy isn't strong enough to handle a .25%

43

Strategist 2015 Sep 18, 4:29pm

Newbie123 says

Strategist says

If they raised the rates by a token, the stock market would have rallied, and bond rates would have actually dropped.

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

1. Not raising the rates indicates a weak economy still in need of help. Especially after months of claims by the Feds of an improving economy.
2. Uncertainties are now sky high. Wall Street hates uncertainties.
3. The stocks rallied right up to the Fed announcement, on expectations of interest rates being raised.
Nevertheless, this is wall street. Some major signs of an improving economy, and the stocks will start rallying again.

44 Philistine 2015 Sep 19, 6:22am