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A couple of charts that highlight how disconnected house prices have become from critical end-user, shelter-buyer, employment and income fundamentals in the most populated US cities. People that look at “national” this and that miss the hair in their couscous. In short, I don’t care too much about the superb affordability in economically insignificant regions.
The incredible essay below is reproduced here with permission by Dr. Hunt for Epsilon Theory. If Dr. Hunt is even moderately accurate, which I believe he is, the housing market headwind on deck could be every bit as powerful as what hit at the end of Bubble 1.0. Bottom line: The Fed, during Obama, did
Bottom Lines:  The past two times Homebuilder Sentiment hit a bubblicious 70 were at the peak of the tech & credit/housing bubbles. Historical divergence between ecstatic HB Sentiment and lethargic builder housing demand. ITB (pure-play builder stocks), and XHB (“housing-related”, retail-heavy names), haven’t been as diverged since the big crash. XHB has gone virtually nowhere
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

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