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Logan Mohtashami says

Low Housing Inventory Lie Still Lives On

Oh God. What are we gonna do with you Logan?
The pre recession was low too.

they say a balanced market has 6 months, so in some areas that are running 2-3 months inventory there is some validity to that... but i agree that the main culprit is weaker buyer right now coupled with price of homes that are in good supply i.e. luxury units.

DieBankOfAmericaPhukkingDie says

You forgot to mention the control of the US government by jihadi maoists.

you went with a classic election year avatar. nice.

No matter how times I repeat this very fact, it simply doesn't matter

We have never, ever been a 6 month natural housing inventory country since prices have taken off in 1996, not one time outside a recession a housing bust

For 8 years we have heard that home sales are held back due to low inventory

Well this chart puts that thesis to rest

This is works if you believe in math, facts and data...

If you don't, then continue with the spin that inventory is too low....

Smoke on it !

Logan Mohtashami says

This is works if you believe in math, facts and data...

If you don't, then continue with the spin that inventory is too low....

Smoke on it !

Ironman says

I get so tired of listening to that low inventory chant if there's not 6 months available... It's such crap...

The bottom line, if you and your neighbor want to each buy a house, and there's 3 houses on the market, there's enough inventory.

How many people go to the store to buy a gallon of milk, and there's 3 gallons on the shelf and say there's low milk inventory because there's not 6 gallons on the shelf?

What a load of crap. That is a ridiculous analogy. Every gallon of milk is the same. Every house on the market is different.

If I'm looking for a 4BD 2 BA ranch in Manalapan-does a 2BD 1BA house for sale in Plainfield really help me?

Ironman says

I get so tired of listening to that low inventory chant if there's not 6 months available... It's such crap

This is true and what I am talking about is national.

I am serious, I have no idea how people have gotten away with this lie on inventory for years. I can't even make up a fake data to support, this is how bad the thesis is

All I want is a Miami Condo crash so I can swoop in. It's about that time, it happens like clockwork.

Ironman says

That's YOUR problem... YOU have selectivity issues, but it doesn't change the FACT that a house is available to buy.. Now, if you want purple countertops and polka dot toilets, 2 YEARS of inventory won't be enough to find that.

It's a good thing this country has clueless "sheep" still willing to go along with the narratives!!

Countertops and toilets can be changed relatively easily. Changing the location of a house or adding 2 bedrooms is much more difficult.

I'm not even sure what story Logan is trying to spin here, but it is a fact that there is not enough supply in the US. By definition, if house prices and rents are increasing faster than inflation, then there isn't enough supply. Period.

Ironman says

You might get your wish:

http://www.wsj.com/articles/another-condo-bust-looms-in-miami-1459266180

The point here is very simple

For many years everyone on T.V. and on conferences I have attended has had this core thesis

1. The U.S. housing market is held back on sales due to a lack on inventory

2. That doesn't make sense when we had lower inventory during the housing bubble years and a lot more demand

Just keep it that simple, the rest of the article are the reasons why. However, for 20 years we have never had annual amounts of inventory for 6 months outside a recession.

It's not a natural state of economics for us here in America ... the game changed when prices deviate in 1996 and for new homes at the start of the century

Logan, I listened to you when you said housing wouldn't recover, over and over, in 2011.

I didn't buy a home.

Since then, what has happened? housing prices have gone up by 50%... rents have gone up by 25%.

I lost my ass for listening to you, you stupid POS. thanks.

https://loganmohtashami.com/2011/12/

youareworthless says

n't buy a home.

First, Hello Doom Bubble

Was wondering when you step in.... Doom Bubble or what ever name you hide behind now. It's been 5 years, don't you think you could use your real name now

In any case hope all is well, it's been a while since we last chat.

youareworthless says

gone up by 50%... rents have gone up by 25%.

On another note, since inventory fell below 6 months which happened in mid 2012 ... every single housing prediction article had price gains, every single housing prediction article

2013, 2014, 2015, 2016 :-)

By all means copy and paste all the prediction articles

Math, Facts and Data matter, even my hardest troll followers know this ;-)

you say that we have an affordability problem, yet deny that low inventory levels in the hot markets are contributing to price gains (which affect affordability)?

outstandingly stupid.

landtof says

you say that we have an affordability problem

The ability to move up ( first time home owners) to 2nd home has prevented lower price inventory for a long time

landtof says

(which affect affordability)?

outstandingly stupid.

and on that point you made my point twice, :-)

Since 2000, the builders aren't building first time home buyer crop, they'e building bigger and bigger homes

Year 8 of the economic cycle and new home sales on a nominal level are still in recessionary total demand levels

and adjusting to population we are back to the early 1980's when rates were north of 10%

let me try again, and you tell me why low inventory doesn't matter:

landtof says

let me try again, and you tell me why low inventory doesn't matter:

Don't over think this one

Inventory

Sales

We have more inventory now than the housing bubble years but we have a lot less demand

In fact existing home sales once you exclude the extra 15%-20% cash buyer in this cycle would be under 5 million every single month this cycle barring the 2010 home buyer tax credit month

Logan Mohtashami says

We have more inventory now than the housing bubble years but we have a lot less demand

In fact existing home sales once you exclude the extra 15%-20% cash buyer in this cycle would be under 5 million every single month this cycle barring the 2010 home buyer tax credit month

I'm not sure making comparisons with a bubble period is really useful. There was obviously overstated demand skewing any comparisons.

Saying we have less demand now vs. 2005 is like saying unemployment in 2009 wasn't that bad compared to 1933.

tatupu70 says

Saying we have less demand now vs. 2005 is like saying unemployment in 2009 wasn't that bad compared to 1933.

1999-2005 take any year you want

Lower inventory and a lot more demand, not by a little a lot more demand

Now the peak to bottom should never be used for anything in economics

New home sales fell 82% from the peak

What I am talking about is pure net economic cycle demand curve economics

One of the reasons why this is happening is that demographic economics wasn't great for housing in this cycle but in years 2020-2024 it will be

Mortgage demand numbers today is back to late 1990's levels with rates 4% lower

Even with lower rates and higher inventory.... Not this cycle

This was the core thesis of all my writings since late 2010

This economic cycle doesn't have the proper demand curve behind it to have a strong housing demand curve. It has a great renting back drop but the demographic economics for housing doesn't get better until years 2020-2024 .....

The Big X variable is always rates ... for the 2% lower to continue it will need to print out a 1.25% -2.25% 30 year fix, now I am not saying that can't happen, that would be following the 35 year trend... but you get my drift.... it's asking a lot

Debt for some sure is a problem. But people aren't going to be risking their lives to move up knowing how shitty it may turn out for them in the next crash. You have a whole generation of people many of whom at some point lost housing due to the hubris of the bubble and collapse. Those people aren't going to take stupid real estate risks anymore. Next generation will be stupid again like we were, and will repeat the mistakes, but that's 20 years out.

FortWayne says

next crash

I don't believe we will see a housing price crash, of course when inventory gets over 6 months price have down side capacity. However, the nature of the down turn during the housing bubble years (PoP) it was a lot leverage on non capacity owning debt.

This cycle has been the best home buyer quality I have seen in ever in my 20 years and there is no exotic debt in the system. So, much like the next recession, I don't believe it will be dramatic in any nature like we saw after the housing bubble

Historically bubble aren't back to back in the same sector of the economy

Logan Mohtashami says

Mortgage demand numbers today is back to late 1990's levels with rates 4% lower

Demand is driven more by wages than interest rates.

What "should" demand be at? Purchase index of 300? 200?

I still don't agree that using purchase index is a good reflection of demand either--it assumes unlimited supply.

tatupu70 says

Demand is driven more by wages than interest rates.

Wages are growing ....

We all have to remember housing economics lives off Demographic economics... because home buyers in mass are ages 28-42 ..

This economic cycle even today

Ages 21-29 are massive
Ages 21-26 biggest age group in America

People make the mistake thinking that all the demand for housing during the housing bubble years was fake demand, not the case a portion of the demand from 1999-2005 was but not all of it

Prime age labor force growth peaked in 2007

Then Gen X got whipped during the bubble and we haven't seen any boom in boomerang buyers

Old, Young and the middle got whacked with foreclosures...

We never had it in the first place to have a strong demand curve cycle

Years 2020-2024 will be different

By that time you will simply have a higher supply of more age appropriate home buyers and people having kids

If I could give one website to everyone to study it's the Census population Live tracker

If you look at my economic predictions

2% GDP trend job creation numbers are very in line to what the final numbers were.. Labor force growth key for economics

If you take my new home sales predictions over the last few years it beats every single wall street analyst and economics by a long shot because they thought since we are working from the lowest bar of sales ever recorded in the U.S. ... that meant sales would be booming in this cycle

Worst demand curve on record ever, we don't have any data to compare how soft this cycle is for new homes

The one time rates rose to 4.5%

2014 = negative growth in existing homes
2014 = 22%-25% miss in new home sales ended up only 1.9%

Both markets had higher inventory ... and rates fell through out the year as well...

That huge miss in 2014 set the low bar for 2015 to beat and even with that low bar new homes sales missed by 10%-15% hence why the builder had that correction because everyone was priced for much higher growth .... Except me I had 8%-12% sales growth with up side if median price cooled down and it did... we got 15% growth

Put it to you this way

1999-2005 vs 2012-2016

2012-2016

- Higher wages
- Lower interest rates
- More inventory
- One of the longest expansions on record post WWII

= A lot less sales and being held up by a 15%-20% extra % cash buyer

So what you're saying is that it's not the low inventory, it's the high prices ?

How is the effect that lower prices have on demand any different than the effect that higher wages has on demand ?

Or put differently, if prices are too high, would not an increase in supply help allow prices to fall ? Certainly at some level of inventory this is the case.

Affordability is just as much a function of housing prices as it is of income.

marcus says

would not an increase in supply help allow prices to fall

A lot people thought inventory would be getting stronger in 2015-2016 because we are nominal back to bubble peak

What my thesis has been is that you need a lot more higher prices to bring inventory out and there is always going to be a catch 22 here because

A. Move up buyer is always going after a bigger home
B. He or She or them needs at least conservatively 28%-33% equity to be able to move up after paying transaction cost. ( conservative estimate)
C. If they can't put 20% down then they have to buy a bigger payment by taking on a bigger loan amount with PMI

This is what happens when price deviates so much like we have seen in the last 20 years

Then the builders aren't helping because they want to build bigger and bigger homes for the sake of profit margin

This is all new territory for everyone and everyone should adjust their economic calls accordingly.

Since I work in the Biz I get a first hand economic glimpse of all this and what has happened over the last 20 years.

Best way to fight housing inflation... dual incomes ... you get dual incomes into the equation almost all my models flip to much more affordable, even here in CA too.

But until then, the thesis ... not low inventory holding housing demand back, plenty of inventory to buy but it's economics, demographics, incomes, assets, debt, the core things that matter

Logan Mohtashami says

But until then, the thesis ... not low inventory holding housing demand back, plenty of inventory to buy but it's economics, demographics, incomes, assets, debt, the core things that matter

high/rising inventory would be a sign that the market is weaking. This moron is too stupid to even see that most basic principle of economics, applied to housing.

They are called the LAWS of Suppy and Demand for a reason.

youareworthless says

This moron is too stupid

Then you disagree with the thesis brought by many that said housing demand is held back because inventory is too low. Which I disagree with. Which is main thesis of this article,

We have more inventory, low rates, higher wages and still a lot less demand.

Then again, all you care about is prices not sales...

2 different worlds, as always, inventory under 6 months = price gains, never strayed from that thesis

In fact rates are 2% lower and we have had higher inventory this entire cycle more than 1999-2005

- Higher Inventory
- Lower Rates
- Higher Wages
= Less demand

This with the extra 15%-20% cash buyer

Imagine if that wasn't in play, total existing home sales would be under 5 million every single month

That's just the reality of it