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  • Why U.S. Homebuilders Are Pushing Towards Highs  [View article]
    I'm always add odds with how housing performs vs how it should perform. A lot of historical correlation between housing and jobs/income seemed to be left in the dust in some areas, namely California. But California's stats/ratios/etc are always a bit skewed. The home price recovery that seemed to gain traction in Spring 2013 did defy a lot of my understanding of housing economics (not armchair economics, I do this for a living), but my livelihood depends on real estate, so I joined lock step. I'm still scared as sh** because it does not make sense. Excluding the mass purchases made by the new single family landlord class, It seems to be a recovery in the mindset of the people paired with low borrowing costs. My focus is infill Los Angeles and adaptive reuse projects that also have become absurdly valued. I'm at a loss about the whole thing and to have to look at new deals every day with this confusion and fear really sucks. Oh well, feast or famine.
    Feb 12, 2015. 05:00 PM | Likes Like |Link to Comment
  • Bubble Watch: Home Prices Still 2% Undervalued And Slowing Toward Smooth Landing  [View article]
    Regarding the metros where home prices are overvalued relative to fundamentals, I see the list of areas where home prices are always overvalued relative to fundamentals. It's like 50% of California should be removed from any study because it never makes sense, never behaves like the rest.
    Jan 15, 2015. 12:54 PM | 1 Like Like |Link to Comment
  • Strong Home Sales In California Put KB Home Solidly In The Penalty Box  [View article]
    Yes, sales typically drop after summer. Ggiven how low rates are were in September, I wouldn't have been surprised by an increase.

    I'm not sure about the misleading accounting over at KBH. Isn't all GAAP accounting pretty misleading? And who wants to do that homework. If you know what it is, Dave, let us know.

    All in all, KBH doesn't seem to be going out of business, but I probably wouldn't buy the stock until it's around 13, but that's my non-GAAP analysis.
    Oct 20, 2014. 06:28 PM | Likes Like |Link to Comment
  • Housing Market Fundamentals Continue To Deteriorate  [View article]
    It's standard to have a month to month decline in August, but a year to year decline is not awesome. If 2013 hadn't been such an strange year with people all of the sudden rushing in and driving up prices, we probably would think things looked ok.
    Oct 10, 2014. 12:16 PM | Likes Like |Link to Comment
  • Real Estate - The Fed Threw Us A Bone  [View article]
    Agreed. Rates only offer seasonal bumps (noise). Housing never fully recovers without a middle class recovery.
    Oct 10, 2014. 12:09 PM | Likes Like |Link to Comment
  • Are Housing Prices Headed Back Down?  [View article]
    It is out third house and one was bought when I hadn't made a cent for a few years (mid crash). Either of our incomes would have qualified alone. The problem was largely in the new documentation requirements and the incompetence of the underwriters and support staff.
    Sep 15, 2014. 12:32 PM | 2 Likes Like |Link to Comment
  • Are Housing Prices Headed Back Down?  [View article]
    If there is one thing that really drives housing it's middle class financial health which is really just jobs and income. We disconnected from that a bit, so available, cheap credit had to fill a void, as did wealthy investors. I think about my recent experience with getting a 70% LTV loan on my new house. I have steadily made $350-450k/yr for many years and own a few commercial properties with low leverage and when I go for a $700k loan I almost couldn't get it done with the nonsense I was put through. My wife is a real estate attorney and I'm a developer. We had the necessary docs to the bank within hours of any info requests and we barely made it. I almost lost the house, but the seller granted an extension. It was shocking mainly because we are kind of experts at this stuff. I can't imagine being a first time buyer with no experience and bad ratios. Oh well.
    Sep 8, 2014. 12:37 PM | 3 Likes Like |Link to Comment
  • Drowning In Unsold New Homes?  [View article]
    Six months of new home supply is actually not bad. Ballooning inventories? Come on now. The market is messed up for other reasons, this is not one of them.
    Aug 27, 2014. 01:38 PM | 2 Likes Like |Link to Comment
  • Zillow Housing Data Portends A Housing Downturn  [View article]
    It's not the people in college who are important, it's those who have just graduated. I seem to remember that for decades the median age of first time homebuyers had been at 30-31 for decades. If that were to trend up it would be a good indicator, but I think it was still 31 last year. Given the sample size of about 5.5 million, a trend up to 32 might be significant.
    Jul 30, 2014. 03:22 PM | Likes Like |Link to Comment
  • Zillow Housing Data Portends A Housing Downturn  [View article]
    Increased borrowing costs alone will push down prices in many markets. As for everything else, I don't really know.
    Jul 30, 2014. 12:44 PM | 3 Likes Like |Link to Comment
  • The Housing Market Is In Big Trouble  [View article]
    If you actually get the mortgage payments then wall street would rather hold the loans. If you don't get the mortgage payments then you get the house anyway, hopefully at a decent ltv. Managing a portfolio of sfr is a damn nightmare that requires big overhead.
    Jul 29, 2014. 01:39 PM | Likes Like |Link to Comment
  • New Homes Sales For June Plummet  [View article]
    Lennar is moving back in to apartments. They used to have a huge multifamily wing, but they moved out of it awhile ago and then sold LNR. Of all the major homebuilders, Lennar definitely has the most experience with multifamily. They were always more diversified in real estate than the other builders. That said, they are probably doing so because the first time buyer is largely absent from the housing market these days.
    Jul 28, 2014. 02:18 PM | Likes Like |Link to Comment
  • Are We In A Housing Bubble?  [View article]
    a paradigm shift of people accepting a home as merely a shelter would likely crash the market because the rental yield just won't be there for investors. Housing values will be based on cap rates and people who can't afford to buy a house also can't afford to pay a rent that provides a decent return to investors at these current valuations.
    Jun 25, 2014. 02:19 PM | 2 Likes Like |Link to Comment
  • Is This The End Of The Housing Recovery?  [View article]
    Unfortunately, i'm very familiar with what happens to land on the way down. While doing acquisitions for a fund (around late 2006), I had a $50 million pipeline of land deals (acquisition cost) that theoretically would have sold for $150 million when entitled. Within the first few months of 2007 the land residual for housing use was negative. The fund got out about $10 million during the bloodbath and that was only because a few sites reverted to industrial land value. I remember thinking that if the market holds another 3 months I'll make $10 million. Nope. Nada.
    May 7, 2014. 06:25 PM | Likes Like |Link to Comment
  • Is This The End Of The Housing Recovery?  [View article]
    Wall St should consider price appreciation in houses when it comes to homebuilding stocks. Raw or entitled land is bought 1-3 years ahead of building permits or sales orders. That land is bought (if done so prudently) based on housing values at that time - backsolved from sales price to land residual. If the market appreciates then the profit is generally higher. Most homebuilders do not underwrite price appreciation but do underwrite cost appreciation. Assuming all other things equal or no weird F ups, any appreciation that occurs from the time you strike your land deal to the time you strike your home sale is all additional profit. Of course this happens in reverse on the way down should the market falter.
    May 7, 2014. 02:16 PM | Likes Like |Link to Comment