Zelman on housing

[Morgan]

On 1/24/2022 at 4:32 PM, Spekulatius said:

Looks like he is the seller. 

 

He is a seller

http://openinsider.com/screener?s=KBH&o=&pl=&ph=&ll=&lh=&fd=365&fdr=&td=0&tdr=&fdlyl=&fdlyh=&daysago=&xp=1&xs=1&vl=&vh=&ocl=&och=&sic1=-1&sicl=100&sich=9999&grp=0&nfl=&nfh=&nil=&nih=&nol=&noh=&v2l=&v2h=&oc2l=&oc2h=&sortcol=0&cnt=100&page=1

 

 

Total side note - that is a great site! 

[fareastwarriors]

Housing is so hot that even Disney is getting in on the action?

 

 

https://deadline.com/2022/02/disney-panned-residential-communities-rancho-mirage-1234934824/

 

Disney To Build New Residential Communities, First In Rancho Mirage, California

[Gregmal]

Yea lets see NFLX do that. Anyone want to live in Albuquerque?

[KJP]

27 minutes ago, fareastwarriors said:

Housing is so hot that even Disney is getting in on the action?

 

 

https://deadline.com/2022/02/disney-panned-residential-communities-rancho-mirage-1234934824/

 

Disney To Build New Residential Communities, First In Rancho Mirage, California

 

There's demand for this even among the 55+ crowd?:

 

"At each location, it said Disney cast members trained in the company’s guest service will operate the community association."

 

"The first community [will] . . . offer a range of home types including estates, single family homes and condos, including at least one area expressly for 55+ residents."

[gfp]

All they want is for their grandchildren to visit them more often

[Gregmal]

Brain starting to really go into ludicrous mode here because all this shit is creating a lot of moving parts but whoa is me it seems everyone has forgotten about the Fed raising rates. Or they don’t care anymore. 10 year treasury has come back big. Are we in a scenario where safe haven treasuries overpower Fed speak and action? If so, mortgage rates are tied to one, not the other. Commodity price insanity is only….making houses WAY more expensive. Rents have to follow. Both have no supply. Which puts further cement roadblocks in the home builder pipelines and stunts their building ambitions. I’d imagine we aren’t too far off from federal government floating gas subsidies for lower and middle class. While hard to fathom, could this all be still the early innings of what is to come? All I know is if I owned real estate, specifically residential(which I do) no way in hell I’m selling any time soon. 

[crs223]

Northern Virginians are FOMO panic-buying homes.  My coworker put in an offer $80k over asking before the home listed on MLS - sight unseen and with no inspection or other contingencies.  Her offer was second best!

 

Last time I checked the Fed is still running at 0%.  Can someone explain how this is not terrible?  Perhaps Buffett can give a calming "patient is having a heart attack, fed is doing the right thing" talk.

 

Begin conspiracy theory nonsense ->

 

Can someone give a rebuttal to Ray Dalio's changing world order idea:

1. World agrees to Bretton Woods based on a gold-backed USD
2. USD loses gold backing, allowing printing
3. Fed lowers interest rates, blowing ever larger debt bubbles
4. Fed chooses inflation over debtor-crushing rate hikes
5. Right vs left infighting about the wealth gap that grows with asset prices
6. World tires of Bretton Woods, SWIFT, imperialism, etc
7. Another nation comes up with an alternate system

Edited March 7, 2022 by crs223

[Gregmal]

MICHAEL BURRY
Did you find it odd that when the tech bubble burst in 2001 the housing market in San Jose, the tech center of the world, went up?

 

 

 

Yup. Gonna happen again. I sometimes, obsessively, look for reasons to be concerned about having concentration in housing. Haven't found a valid argument yet, not even close. Its always the same old dumb stuff about rates and new supply. Think we get round two of the phenomena Burry talked about in Big Short re:tech bubble and housing. Gonna be fun.

[bargainman]

Apologies for the political click bait title of this video.  I thought it was interesting though wrt housing, especially in CA and NY.  Basically the 'yes, but not in my backyard' issue.

 

 

[Gregmal]

LOL please. Don’t even get me started. How bout the coastal elitist right of passage of retiring and ducking out to a state with lower taxes? 

[bargainman]

ha.  Those are non-elites who can't afford to retire in state!  The actual 'elites' stay  

[thepupil]

14 hours ago, Gregmal said:

LOL please. Don’t even get me started. How bout the coastal elitist right of passage of retiring and ducking out to a state with lower taxes? 

*rite 

- coastal elitist
 

Edited March 14, 2022 by thepupil

[KJP]

14 hours ago, bargainman said:

Apologies for the political click bait title of this video.  I thought it was interesting though wrt housing, especially in CA and NY.  Basically the 'yes, but not in my backyard' issue.

 

 

 

A good essay on this topic:  https://philo.substack.com/p/scarcity-truthers?s=r

[bargainman]

15 hours ago, KJP said:

 

A good essay on this topic:  https://philo.substack.com/p/scarcity-truthers?s=r

 

oof that bit about the medical association limiting supply really hits a hot button.  In the meantime healthcare costs keep on climbing....

[fareastwarriors]

The housing market's key metric just took an ugly turn for home buyers

https://fortune.com/2022/03/14/housing-market-key-metric-inventory-zillow-bad-for-buyers/

[Spekulatius]

If someone wonders why mortgage rates have gone up so much someone on twitter (forgot the link) posted that there is a feedback loop going on that causes falling prices for MBS. Since almost every mortgage is going to be packaged into MBS, the decline in MBS (mortgage backed security) prices causes higher yield spreads over treasuries and therefore higher mortgage prices.

 

the feedback loop has started with the interest rate reversals and outlook from the treasuries. MBS are a peculiar paper because their duration floats with the direction of interest rates. This is because prepayments (resulting from refinances) slow down during rising interest rates.

 

the Feedback loop is actually a triple whammy where

1) Rising interest rates ---> Increase in MBS duration ---> Institutional investors selling MBS (to reduce risk from rising duration) --> increased spreads to treasuries.

 

So in other words, mortgage rates will go up much faster than you would think if interest rates trends reverse, because they are tied to the pricing of MBS. I think it makes sense that this is what we are seeing here. one would at some point think that the spreads at least stop rising  but it's possible that ongoing rate rises cause new waves of selling in these MBS.

 

I possibly got it all wrong since I am not an expert, but these credit markets often work in peculiar ways, because most parties involved are just "Automatons" that do whatever meets their mandate, rather than taking contrarian stances.

[fareastwarriors]

@thepupil help.

What's going on with MBS and mortgage rates?

[thepupil]

7 hours ago, fareastwarriors said:

@thepupil help.

What's going on with MBS and mortgage rates?

Spekulatius covered it. MBS are negatively convex. Their duration increases when you don’t want more duration and vice versa. They’re effective “short rate volatility”. 

[Gregmal]

Last year available listings in my town were ~120. Previously this figure was generally between 130-180. Currently? 60. 

[Gregmal]

On 10/20/2021 at 7:44 PM, Gmthebeau said:

I am the one who can’t stop laughing.

Boomp. Got top? TSLA and Moderna vs APTS? Update? Holla back 

[Gregmal]

On 10/25/2021 at 3:12 PM, Gmthebeau said:

 

LOL.  

 

TSLA up over 11% TODAY.  Hit $1 trillion in market value.

MRNA up over 5% TODAY.

 

You should not talk about things you don't understand.  It's "better to keep your mouth shut and appear stupid than open it and remove all doubt"  Boom!

How bout now? Boom

[cubsfan]

^^ Ah yes, the memories...and they disappear.

[Gregmal]

https://nypost.com/2022/07/26/us-home-prices-to-plunge-substantially-on-cratering-demand/

 

 

another narrative grab garbage piece. After rising in some markets by 2-3x and generally 40-50% even in average ones, home prices may retreat 15-20%….oh no!

 

if we say it perpetually, eventually we will be right. What losers. 

 

Housing continues to be the only asset class where you can have years of monthly price gains yet one or two months of single digit decreases means it’s blowing up. 

[Libs]

21 hours ago, Gregmal said:

https://nypost.com/2022/07/26/us-home-prices-to-plunge-substantially-on-cratering-demand/

 

 

another narrative grab garbage piece. After rising in some markets by 2-3x and generally 40-50% even in average ones, home prices may retreat 15-20%….oh no!

 

if we say it perpetually, eventually we will be right. What losers. 

 

Housing continues to be the only asset class where you can have years of monthly price gains yet one or two months of single digit decreases means it’s blowing up. 

I agree with your take. But, it's going to take a while for activity to recover IMO.

 

Meanwhile, I just got a note from my agent in Irvine, CA, noting the following:

 

-19% of homes for sale in May reduced their asking price at least once. Currently, it's 35%.

-Inventory is up from a low of 954 homes to 1504. Pre-Covid average: 4,666!

-Sales are down 40% from peak and lowest since 2004.

 

Just some local color. My point is, these are numbers indicating a slowdown, not catastrophe.

 

 

[Gregmal]

For sure. Just pointing out how misleading and bizarrely negative on the narrative side stuff is when really it’s nothing worth fretting. The inventory is a great example. A housing bear will proclaim “soaring inventory. Up 60%!” And then use this to support doom and gloom. Then you ask them if that’s up 60% from pre COVID levels or some stupid cherry picked metric from after that? And they predictably shut up or change the subject to another misleading headline.