<< <i>Boomers do not want the responsibility if home ownership and millenials are not yet in family formation mode. That doesn't mean a bad economy, just the way it is. The new normal, at least for another 10 years. >>
I disagree. The millenials can't afford to buy whether they want to or not. There has been no wage growth keep up with the increase in the cost of housing. And it doesn't explicitly mean a bad economy but it is a drag on the economy. When a brand new home is sold I would have to estimate it triggers $25-75k of additional spending, on average, for landscaping, window covering, furniture, decor, and customizations. That's a lot of money to stop going into the economy.
<< <i>I disagree. The millenials can't afford to buy whether they want to or not. There has been no wage growth keep up with the increase in the cost of housing. And it doesn't explicitly mean a bad economy but it is a drag on the economy. When a brand new home is sold I would have to estimate it triggers $25-75k of additional spending, on average, for landscaping, window covering, furniture, decor, and customizations. That's a lot of money to stop going into the economy. >>
Wage growth ??? WG = housing costs??? Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ...
with the soft employment number today and downward revisions for past two months, what does everyone think gold/silver will do next week? i would think up. Up $20 on gold, $1 on silver?
If wages do not increase, it's hard to have the price of housing go up as no one can afford the higher prices. Econ 101.
<< <i>Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ... >>
You must live in the magical world of stagnant prices with Cohodk. The data for LA tells a different story: >>
So in LA they are the same as 10-11 yrs ago so what? And if they were, higher it's one city, and are they using all the same houses for reference or some mathematical theorem ? And where exactly in LA? Beachfront? BEV Hills, Watts? Or same number for every block in every sq ft of LA?...
<< <i>So in LA they are the same as 10-11 yrs ago so what? >>
So what? You made the claim that homes were CHEAPER than 15-20 years ago. They are not (in LA) according to the data.
<< <i>If the brand new home cost 25-75k in improvements then it isn't a brand new home. >>
Clearly you've never purchased a brand new home. New homes need landscaping, window coverings, pools, custom painting, built-ins, etc.
<< <i>I think you just supported rawteams claim. Are wages in LA the same as in 2004? I bet you'll find wages are higher. >>
I'm not going to research the topic for everyone. There is a proven, historical relationship between wages and housing prices. It's simple: if people can't afford homes then there are no buyers and prices must come down. The cure for high prices is high prices, right? Now can there be local aberrations and bubbles and collapses? Are some cities more affordable than others? Are there some parts of cities and neighborhoods where this doesn't necessarily apply? Of course.
Wage growth has historically been about 3-4%. Wages since 2010 have increased only 1.5-2%/yr. Supposedly we are starting to break out of this slump. Regarding millenials, the average hourly wages for young college grads was at $20 around 1998 and has floated between $19 and $20 since, while home prices have continued to go up everywhere but where cohodk and rawteam live and Detroit. How can they afford homes when a new grad today makes what a new grad made in 1998? Refer to Figure N: The Class of 2014The Weak Economy Is Idling Too Many Young Graduates
New homes do not need a pool to be "complete". Landscaping is also an extra expensive one can choose to do modestly or not. Built-ins? That should be discussed in the contract prior to completion of the home. FWIW--my father was a independent custom home contractor for nearly 40 years. I personally have done all phases of home construction from digging the foundation to roofing to interior trim as he was grooming me to take over the business.
You are not selling homes to recent college grads so I dont know why you make that distinction. Most people do not buy a house until their 30's and millennials are just beginning to reach that age now. Im sure your income was not the same at age 35 as it was at 22.
Yes, high prices cure high prices. But why are prices high? Answer is found in your MLS book---pretty thin isnt it? There is little inventory. Low supply means high prices. A supply problem is usually much less disruptive than a demand problem like we had in 2006. When everyone wants a home prices are high, but what happens when demand falls--prices collapse. And since it can take a several years to develop a housing community, thus increasing supply, prices can and will remain elevated.
In 2000 median income was $41,000 in 2014 it was $54,000. Increase of 32%. In 2000 median existing home price $145,000. Last month was $202,000. Increase of 39%. Almost exactly the same increase as wages. Imagine that.
Dont worry, your home prices in Phoenix are not going to collapse like they did in 2008. We are currently going through a consolidation pattern, just as there were consolidations in the massive bull market from 1999-2007.
You seem to be talking about custom homes. I am referring to tract homes, which are probably by my own guess, 90% or more of all new homes sold. If a person is buying a true custom home, you are correct that there probably aren't that many post-sale interior modifications but they are likely to be in the camp of spending on the order of $100k (or more) in landscaping as you are talking about the high end of the market, $500k+ when you go full custom.
But all I said was that a typical home sale triggers a significant amount of new spending. How many new homes have you sold? I know what my clients spend because when you buy a tract home, you don't get window coverings, you (usually) don't get landscaping, and plenty of clients will go and replace all of the builder-grade appliances, fixtures, and even flooring before they even move in. Tract home builders do not like to get mired in the details of offering lots of choices and customizations. Low end homes don't even include garage door openers and if I were buying a new home I'd prefer to spend a bit more on a good one than take the builder-grade unit. It depends on a lot of factors, but most people like to customize their tract homes, although there are a scant few who will move-in and not touch a thing or turn it into a rental. Those are balanced by those who change out almost everything. Most people fall in between, and we haven't even discussed furniture. But the point is, there is a lot of additional spending associated with every new home sale, and to have new home sales decline it is a significant drag on the economy.
You also need to be careful or more clear when talking about real estate markets. There really is no national real estate market as it varies greatly across the country. There not low inventory in Phoenix. The Feb data showed 4.5 months of inventory which is not a ton but it is also not considered a seller's market either. I consider it to be balanced. I don't know about the rest of the country but they are probably a couple years behind us which means their inventory is probably still low.
But the original point is that you need wage growth to drive home prices. Home prices can go up without the wage growth, just as stock prices can be driven up to unreasonable P/E levels, but ultimately the situation must correct.
One can build a very nice custom home for $250-300k.
Why must home prices drop, why cant they just trade sideways for a few years? Same with stocks. It has happened before.
Talk to the "tract" home builders and ask them their biggest concern. Its not lack of demand, but lack of real estate on which to build a home. Home prices will remain elevated. Home inventory across the USA is at 5 year lows--possibly lower but thats all the data I could find in 2 minutes--at 4.7 months. The real estate market is FAR from dead, and not even unconscious. Home prices in Phoenix are still 30% below 2006 peaks and at 2004 levels. http://us.spindices.com/indices/real-estate/sp-case-shiller-us-national-home-price-index
I agree that with home buying/building comes lots of extra spending. Ive said so much in these threads, but the overall market is very healthy and if anything shows a fairly strong economy. Even if prices are at these same levels 2 years from now there will not have been any economic recession--just a balanced supply/demand equation.
But if one thinks the price is too high, then dont buy. Either you are the market will be correct.
<< <i>Why must home prices drop, why cant they just trade sideways for a few years? Same with stocks. It has happened before. >>
They don't have to. Wages need to come up, prices need to come down, or some of both.
<< <i>Talk to the "tract" home builders and ask them their biggest concern. Its not lack of demand, but lack of real estate on which to build a home. Home prices will remain elevated. Home inventory across the USA is at 5 year lows--possibly lower but thats all the data I could find in 2 minutes--at 4.7 months. >>
4.7 months is considered to be balanced between buyers and sellers. Ideally it would stay this way. I disagree about the lack of land. It's just like the complaints about not being able to find qualified workers. An important qualifier is missing: It's lack of real estate (or workers) at a price the want to pay. There's plenty of workers or land if you increase the price or consider re-development.
I agree that with home buying/building comes lots of extra spending. Ive said so much in these threads, but the overall market is very healthy and if anything shows a fairly strong economy. Even if prices are at these same levels 2 years from now there will not have been any economic recession--just a balanced supply/demand equation.
But if one thinks the price is too high, then dont buy. Either you are the market will be correct. >>
I don't disagree and have never said RE is dead. But there is a lag from some of the data to when we see a result. RE demand in Phoenix has rebounded nicely for Q1 from a very dead Q4. We will have to see what holds for Q2. The article I posted that started the convo was about a decline in SF construction and in increase in MF construction. It is just one data point but could be a trend to monitor. Home builders will build SF homes if there is demand. Why did they cut back? It is not for lack of land. Investors are plowing more money into MF construction, they must be anticipating more renters and/or higher rents.
Median wages are up 30+% in the last 15 years as are home prices. If wages rise only 5% over the next 5 years then expect similar increases in home prices. I'm not seeing any problem.
Median Income Number: $51,939 for 2014. "The U.S. Census Bureau reported in September 2014 that: U.S. real (inflation adjusted) median household income was $51,939 in 2013 versus $51,759 in 2012, statistically unchanged. In 2013, real median household income was 8.0 percent lower than in 2007, the year before the latest recession."
Median U.S. home price is 4X Median U.S. Household Income in 2015. Only one of the reasons home ownership numbers are down.
Yup, the "norn" used to be able to afford a home (or mortgage) 3x your income. Now with interest rates low it is about 4x. Nothing abnormal about todays home prices.
People complained about housing prices in 19555, 1965, 1975, 1985, 1995, 2005, 2015.....and I bet you can predict the future.
<< <i>Yup, the "norn" used to be able to afford a home (or mortgage) 3x your income. Now with interest rates low it is about 4x. Nothing abnormal about todays home prices.
People complained about housing prices in 1955, 1965, 1975, 1985, 1995, 2005, 2015.....and I bet you can predict the future. >>
All those dates above are within the current 78 year housing market cycle. The cycle began in 1955, peaked in 2007 and is expected to end/bottom in 2033. Regardless if people are complaining about housing prices, they pretty much are going to trend one way from 2016-2033. They will have much more to complain about then. No boomers or their kids/grand kids have ever experienced a truly, long term, down-trending "national" housing market. They just figure housing prices generally rise. They were lucky to catch the 1955-2007 up-draft. Their kids will get to participate in the down-draft.
There is 1.5 barrels of oil for every man, woman, child in the US. We be swimming in this stuff.
08-Apr-15 10:32 ET In Play Summary of Weekly Petroleum Data for the Week Ending April 3, 2015 : Production: U.S. crude oil refinery inputs averaged over 15.9 mln barrels per day during the week ending April 3, 2015, 201,000 barrels per day more than the previous week's average. Refineries operated at 90.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.1 mln barrels per day. Distillate fuel production increased last week, averaging 5.0 mln barrels per day.
Imports: U.S. crude oil imports averaged over 8.2 mln barrels per day last week, up by 869,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 mln barrels per day, 4.8% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 526,000 barrels per day. Distillate fuel imports averaged 300,000 barrels per day last week.
Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.9 mln barrels from the previous week. At 482.4 mln barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.8 mln barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 0.3 mln barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories rose 0.6 mln barrels last week and are well above the upper limit of the average range.
Demand: Total commercial petroleum inventories increased by 14.0 mln barrels last week. Total products supplied over the last four-week period averaged 19.2 mln barrels per day, up by 4.5% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.0 mln barrels per day, up by 2.0% from the same period last year. Distillate fuel product supplied averaged over 3.9 mln barrels per day over the last four weeks, up by 2.7% from the same period last year. Jet fuel product supplied is up 7.9% compared to the same four-week period last year.
08-Apr-15 10:29 ET In Play EIA Petroleum Inventory Data : The EIA reports that for the week ending Mar 20: Crude oil inventories had a build of 10.949 mln (consensus called for a build of about 3.3 mln) Gasoline inventories had a build of 0.817 mln (consensus called for a draw) Distillate inventories had a draw of -0.250 mln (consensus called for a build)
<< <i>"There is 1.5 barrels of oil for every man, woman, child in the US. We be swimming in this stuff."
How much Gasoline can be refined from 1.5 Barrels? Are these 55 or 40 gallon barrels? >>
How much gasoline does a barrel of crude oil produce
A barrel of crude oil is about 42 US gallons. Oil refineries heat it to 370 degrees celcius, as the vapor rises it is transformed into various oil products. The lighter molecules of gasoline, diesel or jet fuel continue to rise until it is cooled and syphooned into seperate holding tanks. A barrel of crude oil can make about 19 US gallons of gasoline, 10 gallons of diesel, 4 gallons of jet fuel and another 9 gallons of other oil products such as liquid petroleum gas, plastics, lubricants or heating oil.
Initial Claims Trends Fall to 15-year Lows : The initial claims level increased to 281,000 for the week ending April 4 from a downwardly revised 267,000 (from 268,000) for the week ending March 28. The Briefing.com Consensus expected the initial claims level to increase to 285,000.
According to the Department of Labor, there were no special factors impacting this week's claims reading.
The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000
The continuing claims level declined to 2.304 mln for the week ending March 28 from an upwardly revised 2.327 mln (from 2.325 mln) for the week ending March 21. That was the lowest continuing claims level since December 2000. The consensus expected the continuing claims level to increase to 2.395 mln.
"Fifteen years of policy stimulus and absolutely nothing to show for it. On a net basis, the only jobs created during this entire century are in the HES Complex (health, education and social services). The thing is these jobs have nothing to do with cheap interest rates and easy credit. They are a function of the entitlement state and the massive $200 billion per year of tax subsidies which support employer-funded health benefits. Needless to say, if you spend enough public money in the HES Complex you will get some job growth. You will eventually get a fiscal calamity, too." - David Stockman
<< <i>The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000 >>
That's great if you believe what they tell you. Here's the actual unemployment picture: >>
That's not so great if you believe what They tell you The problem with statistics is they take a sample of the specifics, make them general, then folks reapply them to the specifics. Something gets lost in the translation. How many folks reading this are looking for work and can't find any? Speak up, in between posting pics of your new gold and silver
the only jobs created during this entire century are in the HES Complex (health, education and social services).
ONLY?
David Stockman? LMFAO!!!!
Why you so fascinated with him? You rant about the exploits of the 1% yet you continue to promote one who has quite a history of exploiting. You dont even see how he is now exploiting fear.
<< <i>If only grandma, those imprisoned, housewives, and the military would get off the couch!!!! Forgot those those darn college kids. >>
Yes, you're right. Those people only stopped working after the 2008 recession. >>
Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed?
<< <i>the only jobs created during this entire century are in the HES Complex (health, education and social services).
ONLY?
David Stockman? LMFAO!!!!
Why you so fascinated with him? You rant about the exploits of the 1% yet you continue to promote one who has quite a history of exploiting. You dont even see how he is now exploiting fear. >>
Funny how you often leave out things to support your sheltered view. Stockman said, "On a net basis, the only jobs created during this entire century are in the HES Complex." He also provided the "official" data to prove it.
Fear? Sometimes the truth hurts. Toughen up and get used to it.
<< <i>Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed? >>
You can't claim unemployment forever. The government just forgets about those people (long-term discouraged) and stops counting them. That's why you need the SGS number. And yes, the number is quite believable when you consider the percentage is about twice what it was prior to the recession. Have you seen or heard about Detroit?
<< <i>The truth is Stockman is a fraud. Pick a better source of your "truths" and your message may be better received. >>
I'd sure like to see you make that case. I suspect anyone who does not have your "everything is just fine" outlook is a fraud.
<< <i>Do you think 1 out of 4 working eligible people are unemployed? >>
I think at least 1 out of 4 people who want a decent full time job are not able to find one. Those that settle for less to provide some relief for their families are unfortunately keeping the "official" numbers lower than they actually are. The fact that "public assistance" is at record highs strengthens the case of high unemployment.
<< <i> Toughen up
You edited to add this. Whats that mean? >>
Accept the fact that many people a lot smarter than you are saying the same thing. Maybe you are the one who is wrong.
<< <i>Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed? >>
You can't claim unemployment forever. The government just forgets about those people (long-term discouraged) and stops counting them. That's why you need the SGS number. And yes, the number is quite believable when you consider the percentage is about twice what it was prior to the recession. Have you seen or heard about Detroit? >>
Yeah, ive been to Detroit, and Buffalo, and Toledo and Rochester. You ever been here
<< <i>The truth is Stockman is a fraud. Pick a better source of your "truths" and your message may be better received. >>
I'd sure like to see you make that case. I suspect anyone who does not have your "everything is just fine" outlook is a fraud.
<< <i>Do you think 1 out of 4 working eligible people are unemployed? >>
I think at least 1 out of 4 people who want a decent full time job are not able to find one. Those that settle for less to provide some relief for their families are unfortunately keeping the "official" numbers lower than they actually are. The fact that "public assistance" is at record highs strengthens the case of high unemployment.
<< <i> Toughen up
You edited to add this. Whats that mean? >>
Accept the fact that many people a lot smarter than you are saying the same thing. Maybe you are the one who is wrong. >>
Please tell me when ive been. I can tell you when Stockman has. And when Zerohedge has. And when Schiff has.
I fear only for those who have no insurance to protect themselves from the danger you tell them is not there. Regardless of what you say, I'll bet you have insurance.
<< <i>I fear only for those who have no insurance to protect themselves from the danger you tell them is not there. Regardless of what you say, I'll bet you have insurance. >>
I have life insurance. Car insurance. Home insurance. Health insurance. Probably should get disability insurance.
Oh yeah, and I have a diversified portfolio of assets. And guns and ammo.
The danger you speak of is nothing we havent seen before and we've survived. There is no need for hyperbole and exaggeration of statistics. I assure you the stock market will drop 30-50% at some time in the future. So what? It just did that 7 years ago. I assure you real estate will drop 50% in some areas. So what? It did that 6 years ago. I assure you PMs will drop 30-50%. So what? It did that 3 years ago. I assure you a big city will go bankrupt and its population will decline 50%. So what?
All that has happened over the last decade, and yet here we still are, debating the way it was, is, and will be. Just like we did 10 years ago. Aint this a great place?
<< <i>The danger you speak of is nothing we havent seen before and we've survived. There is no need for hyperbole and exaggeration of statistics. I assure you the stock market will drop 30-50% at some time in the future. So what? It just did that 7 years ago. I assure you real estate will drop 50% in some areas. So what? It did that 6 years ago. I assure you PMs will drop 30-50%. So what? It did that 3 years ago. I assure you a big city will go bankrupt and its population will decline 50%. So what?
All that has happened over the last decade, and yet here we still are, debating the way it was, is, and will be. Just like we did 10 years ago. Aint this a great place? >>
I guess talking about economic trends and factors is pointless then. After all, the people in Zimbabwe and other similar countries are just fine also. In retrospect it would have been silly for them to discuss and pontificate about their country's economy and leadership prior to their recent experience with hyperinflation and other economic chaos. I guess we can end this thread.
<< <i>I fear only for those who have no insurance to protect themselves from the danger you tell them is not there. Regardless of what you say, I'll bet you have insurance. >>
Lol, you fear for nobody that's pure bs, otherwise all your money would go to providing and protecting it for them... You should run for some sort of political Office though, you fit right in...
Comments
<< <i>Boomers do not want the responsibility if home ownership and millenials are not yet in family formation mode. That doesn't mean a bad economy, just the way it is. The new normal, at least for another 10 years. >>
I disagree. The millenials can't afford to buy whether they want to or not. There has been no wage growth keep up with the increase in the cost of housing.
And it doesn't explicitly mean a bad economy but it is a drag on the economy. When a brand new home is sold I would have to estimate it triggers $25-75k of additional spending, on average, for landscaping, window covering, furniture, decor, and customizations. That's a lot of money to stop going into the economy.
<< <i>The earth has all the water it has always had. It doesn't disappear, it is constantly recycled. >>
Actually I thought the earth gained water as small asteroids hit the earth every day. They are mostly ice/water.
<< <i>I disagree. The millenials can't afford to buy whether they want to or not. There has been no wage growth keep up with the increase in the cost of housing.
And it doesn't explicitly mean a bad economy but it is a drag on the economy. When a brand new home is sold I would have to estimate it triggers $25-75k of additional spending, on average, for landscaping, window covering, furniture, decor, and customizations. That's a lot of money to stop going into the economy. >>
Wage growth ??? WG = housing costs???
Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ...
<< <i>
<< <i>The earth has all the water it has always had. It doesn't disappear, it is constantly recycled. >>
Actually I thought the earth gained water as small asteroids hit the earth every day. They are mostly ice/water. >>
Here's one analysis for Earth, the mileage on others' planets may vary
Earth Getting Lighter?
Liberty: Parent of Science & Industry
<< <i>Wage growth ??? WG = housing costs??? >>
If wages do not increase, it's hard to have the price of housing go up as no one can afford the higher prices. Econ 101.
<< <i>Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ... >>
You must live in the magical world of stagnant prices with Cohodk. The data for LA tells a different story:
<< <i>
<< <i>
<< <i>The earth has all the water it has always had. It doesn't disappear, it is constantly recycled. >>
Actually I thought the earth gained water as small asteroids hit the earth every day. They are mostly ice/water. >>
Here's one analysis for Earth, the mileage on others' planets may vary
Earth Getting Lighter? >>
very interesting
<< <i>
<< <i>Wage growth ??? WG = housing costs??? >>
If wages do not increase, it's hard to have the price of housing go up as no one can afford the higher prices. Econ 101.
<< <i>Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ... >>
You must live in the magical world of stagnant prices with Cohodk. The data for LA tells a different story:
So in LA they are the same as 10-11 yrs ago so what? And if they were, higher it's one city, and are they using all the same houses for reference or some mathematical theorem ? And where exactly in LA? Beachfront? BEV Hills, Watts? Or same number for every block in every sq ft of LA?...
Home prices wouldn't be high if the economy was lousy.
Knowledge is the enemy of fear
<< <i>
<< <i>Wage growth ??? WG = housing costs??? >>
If wages do not increase, it's hard to have the price of housing go up as no one can afford the higher prices. Econ 101.
<< <i>Hmmm it's cheaper now to buy a house than 15-20 years ago...at least around Cali ... >>
You must live in the magical world of stagnant prices with Cohodk. The data for LA tells a different story:
I think you just supported rawteams claim. Are wages in LA the same as in 2004? I bet you'll find wages are higher.
Knowledge is the enemy of fear
<< <i>So in LA they are the same as 10-11 yrs ago so what? >>
So what? You made the claim that homes were CHEAPER than 15-20 years ago. They are not (in LA) according to the data.
<< <i>If the brand new home cost 25-75k in improvements then it isn't a brand new home. >>
Clearly you've never purchased a brand new home. New homes need landscaping, window coverings, pools, custom painting, built-ins, etc.
<< <i>I think you just supported rawteams claim. Are wages in LA the same as in 2004? I bet you'll find wages are higher. >>
I'm not going to research the topic for everyone. There is a proven, historical relationship between wages and housing prices. It's simple: if people can't afford homes then there are no buyers and prices must come down. The cure for high prices is high prices, right? Now can there be local aberrations and bubbles and collapses? Are some cities more affordable than others? Are there some parts of cities and neighborhoods where this doesn't necessarily apply? Of course.
Wage growth has historically been about 3-4%. Wages since 2010 have increased only 1.5-2%/yr. Supposedly we are starting to break out of this slump.
Regarding millenials, the average hourly wages for young college grads was at $20 around 1998 and has floated between $19 and $20 since, while home prices have continued to go up everywhere but where cohodk and rawteam live and Detroit. How can they afford homes when a new grad today makes what a new grad made in 1998?
Refer to Figure N: The Class of 2014The Weak Economy Is Idling Too Many Young Graduates
You are not selling homes to recent college grads so I dont know why you make that distinction. Most people do not buy a house until their 30's and millennials are just beginning to reach that age now. Im sure your income was not the same at age 35 as it was at 22.
Yes, high prices cure high prices. But why are prices high? Answer is found in your MLS book---pretty thin isnt it? There is little inventory. Low supply means high prices. A supply problem is usually much less disruptive than a demand problem like we had in 2006. When everyone wants a home prices are high, but what happens when demand falls--prices collapse. And since it can take a several years to develop a housing community, thus increasing supply, prices can and will remain elevated.
In 2000 median income was $41,000 in 2014 it was $54,000. Increase of 32%.
In 2000 median existing home price $145,000. Last month was $202,000. Increase of 39%. Almost exactly the same increase as wages. Imagine that.
https://research.stlouisfed.org/fred2/series/HOSMEDUSM052N
Dont worry, your home prices in Phoenix are not going to collapse like they did in 2008. We are currently going through a consolidation pattern, just as there were consolidations in the massive bull market from 1999-2007.
Knowledge is the enemy of fear
But all I said was that a typical home sale triggers a significant amount of new spending. How many new homes have you sold? I know what my clients spend because when you buy a tract home, you don't get window coverings, you (usually) don't get landscaping, and plenty of clients will go and replace all of the builder-grade appliances, fixtures, and even flooring before they even move in. Tract home builders do not like to get mired in the details of offering lots of choices and customizations. Low end homes don't even include garage door openers and if I were buying a new home I'd prefer to spend a bit more on a good one than take the builder-grade unit. It depends on a lot of factors, but most people like to customize their tract homes, although there are a scant few who will move-in and not touch a thing or turn it into a rental. Those are balanced by those who change out almost everything. Most people fall in between, and we haven't even discussed furniture. But the point is, there is a lot of additional spending associated with every new home sale, and to have new home sales decline it is a significant drag on the economy.
You also need to be careful or more clear when talking about real estate markets. There really is no national real estate market as it varies greatly across the country. There not low inventory in Phoenix. The Feb data showed 4.5 months of inventory which is not a ton but it is also not considered a seller's market either. I consider it to be balanced. I don't know about the rest of the country but they are probably a couple years behind us which means their inventory is probably still low.
But the original point is that you need wage growth to drive home prices. Home prices can go up without the wage growth, just as stock prices can be driven up to unreasonable P/E levels, but ultimately the situation must correct.
Why must home prices drop, why cant they just trade sideways for a few years? Same with stocks. It has happened before.
Talk to the "tract" home builders and ask them their biggest concern. Its not lack of demand, but lack of real estate on which to build a home. Home prices will remain elevated. Home inventory across the USA is at 5 year lows--possibly lower but thats all the data I could find in 2 minutes--at 4.7 months. The real estate market is FAR from dead, and not even unconscious. Home prices in Phoenix are still 30% below 2006 peaks and at 2004 levels. http://us.spindices.com/indices/real-estate/sp-case-shiller-us-national-home-price-index
I agree that with home buying/building comes lots of extra spending. Ive said so much in these threads, but the overall market is very healthy and if anything shows a fairly strong economy. Even if prices are at these same levels 2 years from now there will not have been any economic recession--just a balanced supply/demand equation.
But if one thinks the price is too high, then dont buy. Either you are the market will be correct.
Knowledge is the enemy of fear
<< <i>Why must home prices drop, why cant they just trade sideways for a few years? Same with stocks. It has happened before.
They don't have to. Wages need to come up, prices need to come down, or some of both.
<< <i>Talk to the "tract" home builders and ask them their biggest concern. Its not lack of demand, but lack of real estate on which to build a home. Home prices will remain elevated. Home inventory across the USA is at 5 year lows--possibly lower but thats all the data I could find in 2 minutes--at 4.7 months. >>
4.7 months is considered to be balanced between buyers and sellers. Ideally it would stay this way.
I disagree about the lack of land. It's just like the complaints about not being able to find qualified workers. An important qualifier is missing: It's lack of real estate (or workers) at a price the want to pay. There's plenty of workers or land if you increase the price or consider re-development.
<< <i>The real estate market is FAR from dead, and not even unconscious. Home prices in Phoenix are still 30% below 2006 peaks and at 2004 levels. http://us.spindices.com/indices/real-estate/sp-case-shiller-us-national-home-price-index
I agree that with home buying/building comes lots of extra spending. Ive said so much in these threads, but the overall market is very healthy and if anything shows a fairly strong economy. Even if prices are at these same levels 2 years from now there will not have been any economic recession--just a balanced supply/demand equation.
But if one thinks the price is too high, then dont buy. Either you are the market will be correct. >>
I don't disagree and have never said RE is dead. But there is a lag from some of the data to when we see a result. RE demand in Phoenix has rebounded nicely for Q1 from a very dead Q4. We will have to see what holds for Q2.
The article I posted that started the convo was about a decline in SF construction and in increase in MF construction. It is just one data point but could be a trend to monitor. Home builders will build SF homes if there is demand. Why did they cut back? It is not for lack of land. Investors are plowing more money into MF construction, they must be anticipating more renters and/or higher rents.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
"The U.S. Census Bureau reported in September 2014 that: U.S. real (inflation adjusted) median household income was $51,939 in 2013 versus $51,759 in 2012, statistically unchanged. In 2013, real median household income was 8.0 percent lower than in 2007, the year before the latest recession."
Median U.S. home price is 4X Median U.S. Household Income in 2015. Only one of the reasons home ownership numbers are down.
People complained about housing prices in 19555, 1965, 1975, 1985, 1995, 2005, 2015.....and I bet you can predict the future.
Knowledge is the enemy of fear
<< <i>Yup, the "norn" used to be able to afford a home (or mortgage) 3x your income. Now with interest rates low it is about 4x. Nothing abnormal about todays home prices.
People complained about housing prices in 1955, 1965, 1975, 1985, 1995, 2005, 2015.....and I bet you can predict the future. >>
All those dates above are within the current 78 year housing market cycle. The cycle began in 1955, peaked in 2007 and is expected to end/bottom in 2033. Regardless if people are complaining about housing prices, they pretty much are going to trend one way from 2016-2033. They will have much more to complain about then. No boomers or their kids/grand kids have ever experienced a truly, long term, down-trending "national" housing market. They just figure housing prices generally rise. They were lucky to catch the 1955-2007 up-draft. Their kids will get to participate in the down-draft.
08-Apr-15 10:32 ET In Play
Summary of Weekly Petroleum Data for the Week Ending April 3, 2015 : Production: U.S. crude oil refinery inputs averaged over 15.9 mln barrels per day during the week ending April 3, 2015, 201,000 barrels per day more than the previous week's average. Refineries operated at 90.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.1 mln barrels per day. Distillate fuel production increased last week, averaging 5.0 mln barrels per day.
Imports: U.S. crude oil imports averaged over 8.2 mln barrels per day last week, up by 869,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 mln barrels per day, 4.8% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 526,000 barrels per day. Distillate fuel imports averaged 300,000 barrels per day last week.
Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.9 mln barrels from the previous week. At 482.4 mln barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.8 mln barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 0.3 mln barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories rose 0.6 mln barrels last week and are well above the upper limit of the average range.
Demand: Total commercial petroleum inventories increased by 14.0 mln barrels last week. Total products supplied over the last four-week period averaged 19.2 mln barrels per day, up by 4.5% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.0 mln barrels per day, up by 2.0% from the same period last year. Distillate fuel product supplied averaged over 3.9 mln barrels per day over the last four weeks, up by 2.7% from the same period last year. Jet fuel product supplied is up 7.9% compared to the same four-week period last year.
08-Apr-15 10:29 ET In Play
EIA Petroleum Inventory Data : The EIA reports that for the week ending Mar 20:
Crude oil inventories had a build of 10.949 mln (consensus called for a build of about 3.3 mln)
Gasoline inventories had a build of 0.817 mln (consensus called for a draw)
Distillate inventories had a draw of -0.250 mln (consensus called for a build)
Read more: http://www.briefing.com/GeneralContent/Platinum/Active/TickerSearch/QuickSearch.aspx#ixzz3WkgrjRCY
Knowledge is the enemy of fear
<< <i>There is 1.5 barrels of oil for every man, woman, child in the US. We be swimming in this stuff. >>
Unfortunately, we drink it and it's gone.
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
How much Gasoline can be refined from 1.5 Barrels? Are these 55 or 40 gallon barrels?
<< <i>"There is 1.5 barrels of oil for every man, woman, child in the US. We be swimming in this stuff."
How much Gasoline can be refined from 1.5 Barrels? Are these 55 or 40 gallon barrels? >>
42 gallon barrels and about 22 gallons of gasoline.
<< <i>"There is 1.5 barrels of oil for every man, woman, child in the US. We be swimming in this stuff."
How much Gasoline can be refined from 1.5 Barrels? Are these 55 or 40 gallon barrels? >>
How much gasoline does a barrel of crude oil produce
A barrel of crude oil is about 42 US gallons. Oil refineries heat it to 370 degrees celcius, as the vapor rises it is transformed into various oil products. The lighter molecules of gasoline, diesel or jet fuel continue to rise until it is cooled and syphooned into seperate holding tanks. A barrel of crude oil can make about 19 US gallons of gasoline, 10 gallons of diesel, 4 gallons of jet fuel and another 9 gallons of other oil products such as liquid petroleum gas, plastics, lubricants or heating oil.
Knowledge is the enemy of fear
Initial Claims Trends Fall to 15-year Lows : The initial claims level increased to 281,000 for the week ending April 4 from a downwardly revised 267,000 (from 268,000) for the week ending March 28. The Briefing.com Consensus expected the initial claims level to increase to 285,000.
According to the Department of Labor, there were no special factors impacting this week's claims reading.
The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000
The continuing claims level declined to 2.304 mln for the week ending March 28 from an upwardly revised 2.327 mln (from 2.325 mln) for the week ending March 21. That was the lowest continuing claims level since December 2000. The consensus expected the continuing claims level to increase to 2.395 mln.
Read more: http://www.briefing.com/GeneralContent/Platinum/Active/TickerSearch/QuickSearch.aspx#ixzz3Wp2aTPS8
Knowledge is the enemy of fear
Too many positive BST transactions with too many members to list.
<< <i>The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000 >>
That's great if you believe what they tell you.
Here's the actual unemployment picture:
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>
<< <i>The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000 >>
That's great if you believe what they tell you.
Here's the actual unemployment picture:
That's not so great if you believe what They tell you
Something gets lost in the translation. How many folks reading this are looking for work and can't find any? Speak up, in between posting pics of your new gold and silver
Liberty: Parent of Science & Industry
<< <i>
<< <i>The four-week moving average for initial claims dropped to 282,250 from 285,250. That is the lowest level since June 2000 >>
That's great if you believe what they tell you.
Here's the actual unemployment picture:
If only grandma, those imprisoned, housewives, and the military would get off the couch!!!! Forgot those those darn college kids.
Knowledge is the enemy of fear
<< <i>How many folks reading this are looking for work and can't find any? Speak up, in between posting pics of your new gold and silver >>
Now that's what I call a scientific sampling.
A better poll would be "How many folks reading this KNOW someone (who can't afford new gold and silver) looking for work that can't find work."
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>If only grandma, those imprisoned, housewives, and the military would get off the couch!!!! Forgot those those darn college kids. >>
Yes, you're right. Those people only stopped working after the 2008 recession.
ONLY?
David Stockman? LMFAO!!!!
Why you so fascinated with him? You rant about the exploits of the 1% yet you continue to promote one who has quite a history of exploiting. You dont even see how he is now exploiting fear.
Knowledge is the enemy of fear
<< <i>
<< <i>If only grandma, those imprisoned, housewives, and the military would get off the couch!!!! Forgot those those darn college kids. >>
Yes, you're right. Those people only stopped working after the 2008 recession. >>
Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed?
Knowledge is the enemy of fear
<< <i>the only jobs created during this entire century are in the HES Complex (health, education and social services).
ONLY?
David Stockman? LMFAO!!!!
Why you so fascinated with him? You rant about the exploits of the 1% yet you continue to promote one who has quite a history of exploiting. You dont even see how he is now exploiting fear. >>
Funny how you often leave out things to support your sheltered view. Stockman said, "On a net basis, the only jobs created during this entire century are in the HES Complex." He also provided the "official" data to prove it.
Fear? Sometimes the truth hurts. Toughen up and get used to it.
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
Do you think 1 out of 4 working eligible people are unemployed?
Toughen up
You edited to add this. Whats that mean?
Knowledge is the enemy of fear
<< <i>Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed? >>
You can't claim unemployment forever. The government just forgets about those people (long-term discouraged) and stops counting them. That's why you need the SGS number.
And yes, the number is quite believable when you consider the percentage is about twice what it was prior to the recession. Have you seen or heard about Detroit?
<< <i>The truth is Stockman is a fraud. Pick a better source of your "truths" and your message may be better received. >>
I'd sure like to see you make that case. I suspect anyone who does not have your "everything is just fine" outlook is a fraud.
<< <i>Do you think 1 out of 4 working eligible people are unemployed? >>
I think at least 1 out of 4 people who want a decent full time job are not able to find one. Those that settle for less to provide some relief for their families are unfortunately keeping the "official" numbers lower than they actually are. The fact that "public assistance" is at record highs strengthens the case of high unemployment.
<< <i> Toughen up
You edited to add this. Whats that mean? >>
Accept the fact that many people a lot smarter than you are saying the same thing. Maybe you are the one who is wrong.
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>
<< <i>Interesting that the workforce is 10% larger than in 2000 yet claims for unemployment are at similar levels. Do you really think that 1 out of 4 people is unemployed? >>
You can't claim unemployment forever. The government just forgets about those people (long-term discouraged) and stops counting them. That's why you need the SGS number.
And yes, the number is quite believable when you consider the percentage is about twice what it was prior to the recession. Have you seen or heard about Detroit? >>
Yeah, ive been to Detroit, and Buffalo, and Toledo and Rochester. You ever been here
The boom and bust of towns and cities is very common. http://en.wikipedia.org/wiki/List_of_ghost_towns_in_the_United_States
Yet somehow, this damn country just keeps on a tickin. Gosh darnit. Maybe the Chinese can put us out of our misery.
Knowledge is the enemy of fear
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>
<< <i>The truth is Stockman is a fraud. Pick a better source of your "truths" and your message may be better received. >>
I'd sure like to see you make that case. I suspect anyone who does not have your "everything is just fine" outlook is a fraud.
<< <i>Do you think 1 out of 4 working eligible people are unemployed? >>
I think at least 1 out of 4 people who want a decent full time job are not able to find one. Those that settle for less to provide some relief for their families are unfortunately keeping the "official" numbers lower than they actually are. The fact that "public assistance" is at record highs strengthens the case of high unemployment.
<< <i> Toughen up
You edited to add this. Whats that mean? >>
Accept the fact that many people a lot smarter than you are saying the same thing. Maybe you are the one who is wrong. >>
Please tell me when ive been.
So I think you really meant "smarten up"?
Knowledge is the enemy of fear
<< <i>They all tick until suddenly they don't. Your continued confusion of a heartbeat indicating good health has blinded you to many truths. >>
Yet a cold is incurable cancer?
Blinded by clinical evidence of life is much better than being blinded by fear. No?
Knowledge is the enemy of fear
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>I fear only for those who have no insurance to protect themselves from the danger you tell them is not there. Regardless of what you say, I'll bet you have insurance. >>
I have life insurance. Car insurance. Home insurance. Health insurance. Probably should get disability insurance.
Oh yeah, and I have a diversified portfolio of assets. And guns and ammo.
The danger you speak of is nothing we havent seen before and we've survived. There is no need for hyperbole and exaggeration of statistics. I assure you the stock market will drop 30-50% at some time in the future. So what? It just did that 7 years ago. I assure you real estate will drop 50% in some areas. So what? It did that 6 years ago. I assure you PMs will drop 30-50%. So what? It did that 3 years ago. I assure you a big city will go bankrupt and its population will decline 50%. So what?
All that has happened over the last decade, and yet here we still are, debating the way it was, is, and will be. Just like we did 10 years ago. Aint this a great place?
Knowledge is the enemy of fear
http://www.usda.gov/oce/commodity/wasde/latest.pdf
Knowledge is the enemy of fear
Too many positive BST transactions with too many members to list.
<< <i>The danger you speak of is nothing we havent seen before and we've survived. There is no need for hyperbole and exaggeration of statistics. I assure you the stock market will drop 30-50% at some time in the future. So what? It just did that 7 years ago. I assure you real estate will drop 50% in some areas. So what? It did that 6 years ago. I assure you PMs will drop 30-50%. So what? It did that 3 years ago. I assure you a big city will go bankrupt and its population will decline 50%. So what?
All that has happened over the last decade, and yet here we still are, debating the way it was, is, and will be. Just like we did 10 years ago. Aint this a great place? >>
I guess talking about economic trends and factors is pointless then. After all, the people in Zimbabwe and other similar countries are just fine also. In retrospect it would have been silly for them to discuss and pontificate about their country's economy and leadership prior to their recent experience with hyperinflation and other economic chaos. I guess we can end this thread.
<< <i>I fear only for those who have no insurance to protect themselves from the danger you tell them is not there. Regardless of what you say, I'll bet you have insurance. >>
Lol, you fear for nobody that's pure bs, otherwise all your money would go to providing and protecting it for them...
You should run for some sort of political Office though, you fit right in...