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Dave Kranzler  

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  • Housing Is More Than 20% Overvalued Based On Fundamentals [View article]
    The comment above is incorrect. First, there is an oversupply of new homes. Even Trulia's own chief economist admits this:

    That's a stunning admission from the chief economist of an organization that promotes home sales.

    Second, the value of home is based on the how big of a mortgage the buyer can support. 93% of ALL homes are financed using a mortgage now. Homes have been effectively "financialized" by the Fed and the Government (taxpayer).

    If the Fed were to raise rates, the amount of debt being used to prop up home prices would fall. By how much? What's the convexity of 30 yr mortgage with an avg life of 30 yr mortgage with standard amortization? Well, that depends on rates. As rates move higher, the duration and convexity shoot up and the value of the mortgage plummets. This means that less can be borrowed to buy a home.

    If interest rates were to "normalize" to historical levels, I think we would find that the average home would be overvalued by at least 50%.

    Finally, there's "shadow inventory" that no one discusses anymore, but it's there. According RealtyTrac, and I'll be publishing on this soon, 35% of all homeowners have "effective negative equity." This is the implied home equity AFTER netting out the cost of sellling and moving. This means that 35% of all homeowners will not sell unless they have to because they can't afford the mortgage.

    There's also a potential avalanche of homes that will hit the market by big investment funds looking for an exit strategy on rental portfolios that are no yielding what was modeled. How come no one is asking why these LLC's are not doing IPOs even though the S&P 500 keeps hitting new highs? The last attempted one was 2 years ago by Colony Capital. It was pulled. They are not IPO'ing because they are not producing profits.

    Raise rates just a little and many homeowners will forced out of their homes.

    The Govt and the Fed and working overtime to keep a floor under home prices. When that floor collapses, most people - like the rental yield theory guy above - will be horrified by what happens to home prices.
    Apr 17, 2015. 09:20 AM | 4 Likes Like |Link to Comment
  • The Economic Turn Is Here [View article]
    it's hard for me to see where the author is seeing any signs of growth except in the wages of the Government's "supervisory" category of workers. If you to the St. Louis Fed FRED database, you'll find a link that shows wages have been tanking hard for 80% of the labor force since 2013.

    "Harsh" winter? Really? Let's not forget that every purveyor of economic statistics "seasonally adjusts" its data. In fact, to claim the winter was "harsh" is outright either intentional disinformation or misinformed ingnorance. The two last years according the NOAA has been warmer than historical norm for the country as a whole.

    In short, I'm shocked that the SA editors published this article as-is.
    Apr 9, 2015. 09:24 AM | 2 Likes Like |Link to Comment
  • The Economic Turn Is Here [View article]
    that is a hilarliously great comment
    Apr 9, 2015. 09:19 AM | Likes Like |Link to Comment
  • The Housing Bubble And The Lesser Depression: Either The Very Sharp Dean Baker, Or I, Am Hopelessly Confused [View article]
    Just curious Brad, from where do you derive your statment "fiscal austerity?" True spending is represented by the amount Treasury debt outstanding increases. Since 2010, the amount of Treasury debt outstanding has increased by 47% from 12.3 Trillion to $18.1 Trillion.

    If you were a real analyst, you would know that the true amount of Government spending is not based on the phony budget deficit Obama presents but on tax revenues + debt issued. Cash in = cash out, where "cash in" MUST by definition = tax revenues + debt issuance.
    Apr 3, 2015. 12:38 PM | Likes Like |Link to Comment
  • Why Are Interest Rates So Low, Part 3: The Global Savings Glut [View article]
    That explanation for low interest is the most retarded theory I've ever heard. Hey Ben, how about current account surplus minus debt outstanding for each country? How about the fact that deb/GDP is the highest it's ever been in history. You and your criminal Central Bank cronies have used interest rate swaps to completely cleanse credit risk and duration risk premiums out of the "global yield curve."

    I bet you are thankful that the you won't be in the hot seat when the U.S. collapses.
    Apr 3, 2015. 10:30 AM | 1 Like Like |Link to Comment
  • Green Sprouts In Real Estate [View article]
    Housing stocks are more overvalued now than in 2005/2006. What has just occurred in the housing market is an "echo bubble" induced by $2 trillion in stimulus the Fed directly injected into the housing market. Unit volume sales are stagnant and can't even bounce up to 50% of what they were at the peak.

    Even by the Govt's trumped up numbers, 80% of the wage-earning demographic has seen its avg monthly income decline - it's lower now than in 2007. The average American does not earn enough money to support homeownership.

    According to RealtTrac, no less, 35% of ALL homeowners have "effective" negative equity - STILL.

    Sorry Markos, your analysis is not supported by fundamental facts.
    Apr 1, 2015. 09:17 AM | 1 Like Like |Link to Comment
  • Will The U.S. Housing Market Bloom Anew In The Spring? [View article]
    With over 80% of workers experiencing declining real monthly incomes, exactly FROM WHERE are they going to get the money to buy a home? "Volume" is not picking up. From a seasonal standpoint it might be picking up a little, but if you are basing your view on the SAAR garbage data reported by the NAR and CB, then you are badly mistaken in your view. The Census Bureau doesn't even base all of its data on contract signings. If you read the fine print in their methodology, in areas where they are taking data samples where for whatever reason they can't get contract signing data, they use building permits filed - LOL.
    Mar 31, 2015. 09:17 AM | Likes Like |Link to Comment
  • Will The U.S. Housing Market Bloom Anew In The Spring? [View article]
    Those loans are geared to small investors who will be buying the inventory being dumped by the big investment funds. It's a loan mechanism designed to give the big funds an exit strategy. It's akin to the big funds unloading stocks onto retail just before a parabolic stock market rolls over and crashes.
    Mar 31, 2015. 09:13 AM | Likes Like |Link to Comment
  • Will The U.S. Housing Market Bloom Anew In The Spring? [View article]
    "white hot" means you're hearing about price bidding wars because there's supposedly a low level of inventory. but the bidding wars are occurring in the under $700k range. The entire country is flooded with over $700k listings.

    The under $700k segment has "low" listed inventory because, according to RealtyTrac, 35% of ALL homeowners still have effective negative equity. This means they won't be listing but would be if prices get a little higher.

    Rising prices the way they are rising is only a sign of massive Fed intervention in the market. It's not the sign of a healthy or recovering market. Volume is still 1/2 - 1/3 of what it was at the peak.

    Bidding wars are the sign of a very unhealthy market from a volume perspective. This will not end well.
    Mar 31, 2015. 09:11 AM | Likes Like |Link to Comment
  • The Housing Market Looks Like A Short [View article]
    Yes! Thank you. Another housing market analyst on Seeking Alpha who bothers to do real homework! Bravo:
    Mar 25, 2015. 10:03 AM | 1 Like Like |Link to Comment
  • What Is Driving Housing Stocks Higher [View article]
    "Rising salaries?" Seriously? Have you bothered to look at - the Government's own calculations - that the bottom 90% of the labor force has been experiencing declining income? The real median monthly household income is lower now than it was in 2007. That data is available in the Government's own reports.

    Do your homework please.
    Mar 25, 2015. 10:00 AM | Likes Like |Link to Comment
  • What Is Driving Housing Stocks Higher [View article]
    Have you actually looked deeply into homebuilder 10k's and 10q's? Because if you have, you would know that, from a fundamental analysis standpoint, the homebuilders are more overvalued now using just standard financial metrics than they were at the peak of the housing bubble in 2005/2006.

    How can you say "the labor market is strengthening" when every month - by the Govt's own numbers - more people leave the labor force than are able to find jobs. And the majority of the jobs are part-time. If you look and analyze below headline reports, you would know that.

    Home sales improving? By the Govt's own new home sales numbers, Feb 2015 new home sales - SAAR - were below Feb 2013's report. Where is there a trend of improvement in that?
    Mar 25, 2015. 09:57 AM | Likes Like |Link to Comment
  • What Is Moving Housing Stocks? [View article]
    What in particular did you think was good about LEN's numbers? Do you realize that if they were not allowed to capitalize interest expense, they would have missed their number?

    Do you realize that their debt level soared in their first quarter? Do you realize that they are capitulating on selling homes in some communities and will now try to lease out some of their overbloated inventory?

    The homebuilder stocks are more overvalued now in relation to their fundamentals than they were were in 2005/6:
    Mar 20, 2015. 09:57 AM | 2 Likes Like |Link to Comment
  • Ignore Housing Starts, Housing Permits Were Encouraging [View article]
    "Permits?" Are you serious? What's the average listing price in MLS for a permit? Permits are meaningless other than they make a great statistic in homebuilder bond deal investor presentations.

    Homebuilders are building and completing more homes than their selling. Ask Lennar - they're now going to try renting unsold homes.
    Mar 18, 2015. 12:17 PM | Likes Like |Link to Comment
  • Homebuilders - Why So Blue? [View article]
    Construction spending has been declining, although according to the BLS, the construction industry was one of the biggest "sources" of jobs in Feb. So that blows your lack of labor theory up.

    Here's the truth about housing:

    And here:
    Mar 17, 2015. 09:42 AM | Likes Like |Link to Comment