Some good charts to recap housing ytd.
At this point, housing is just marking time with some segments still growing and some contracting.
Demand is so weak this cycle vs past cycles, the impending down-cycle won’t as ugly on that front.
But, I see no reason why prices won’t reattach to fundamental, end-user, shelter-buyer fundamentals and fall to the same degree as last time around.
If I had to bet on the next move in housing being 10% higher or 20% lower, I would take the latter, levered.
1) New Home Sales: After 8-years and $15 Trillion in .gov and Fed debt & money printing, this is all we get.
Bottom line, do we need $15 Trillion more debt and money printing?
2) APRIL NEW HOME PRICES DOWN 4% YY.
Bottom line: Price gains virtually stopped in late 2014.
Given how the resale market is littered with rehabs, redo’s, flips and flaps, this is a much better look at real house pricing power than Existing Sales, Case-Shiller, or other popular house price indices.
3) April 2017 EXISTING HOME SALES not much higher than 2010 levels.
Bottom line: Demand far lower than Bubble 1.0 levels yet prices climbed faster in Bubble 2.0.
Meaning, “something other” than demand is driving prices.
Or, put another way, the next housing down-cycle will come from a catalyst nobody is watching (except me).
4) Existing Housing Supply Troughed at the Same Level in Bubble 1.0
Found this great chart. Most think supply was higher in Bubble 1.0. Not so.
Just like now, supply was low in Bubble – but fundamental demand was much greater – until one day it wasn’t.
5) QQ Bay Area Prices Fall for First Time Since 2011.
Bottom line: the Q1’17 decline comes from summer 2016 activity meaning the tanker has turned and is declines will continue…and spread.
6) South Bay Area / Silicon Valley Demand has plunged, yet prices are soaring.
Bottom line: Just like the end-days of Bubble 1.0.
7) Past two times HB sentiment hit 70 were sector peaks; the tech bubble and housing bubble tops.
Bottom line: Present divergence between positive sentiment and weak, recession-level builder sales is historical.
8) Rent turns always precede price turns in the popular, horribly lagging, house price indices.
9) Top Rental Market Trend Changes Will Lead House Prices Lower
10) My School Lunch in Grammar School
And nobody had peanut or gluten allergies.
11) Occupancy Fraud — Buying Rentals & Flips Using Prime, 2nd/Vacation Home Financing — Looks a lot like it did in Bubble 1.0 too.
12) HOUSE ATM MACHINE’S ARE BACK AT EVERY CORNER
13) INTEREST ONLY LOAN VOLUME SURGING…JUST LIKE IN BUBBLE 1.0
14) UPDATED, Existing & New NO-GROWTH HOUSING FORECASTS for the remainder of the year.
15) Sell-sentiment at post-crash highs; Buy-sentiment at post-crash lows.
Bottom line: people think it’s a great time to sell, but not buy.