Morning Report – Should we fear another real estate bubble? 10/24/14

Posted on October 24, 2014 by Brent Nyitray

Markets are flattish on no real news. Bonds and MBS are flat as well.

New Home sales rose .2% in September, to 467k while August sales were revised down in a big way, from 504k to 466k.

PulteGroup announced earnings last night which matched the Street. Revenues increased by 4%, driven by an 8% increase in prices and a 4% drop in deliveries. Pulte, which targets the first time homebuyer, applauded the new moves by FHFA to increase access to credit. However, not all builders are on board. Luxury builder Toll Brother founder Robert Toll characterized the proposed loosening of credit standards as “a really dumb-ass idea.” So there you have it.

That said, I think fears that loosening credit standards will fuel another real estate bubble are overblown. Bubbles are psychological phenomenons where people believe an asset can only go in one direction – up. People thought that way about stocks in the late 90s, and about real estate in the mid 00s. If there is going to be a next bubble, it will be in sovereign debt, not real estate. The baby boom has plowed into Treasuries after losing their shirts in stocks and real estate. And investors can play Treasuries through 2x and 3x levered ETFs. We won’t see another real estate bubble in our lifetimes, but our grandkids might.

Amazon.com reported lousy earnings yesterday, and gave a disappointing holiday forecast. Given that back-to-school was nothing all that great, this isn’t surprise.

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9 Responses

  2. jnc4p's avatar
    jnc4p, on October 24, 2014 at 11:14 am said:

    Good piece on a recent Rand Paul foreign policy speech:

    http://www.vox.com/2014/10/24/7053561/rand-paul-foreign-policy-speech

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  3. jnc4p's avatar
    jnc4p, on October 24, 2014 at 12:05 pm said:

    Vox (& former Washington Post) health writer Sarah Kliff loses perspective over the latest ebola case:

    “The New York Ebola patient is a brave and heroic doctor. Stop criticizing his bowling trip.
    Updated by Sarah Kliff on October 24, 2014, 12:50 p.m. ET

    Let’s start at the beginning: Craig Spencer, who contracted Ebola while working with Doctors Without Borders to stop the outbreak in West Africa, is almost certainly a better person than you are. He is almost certainly a more careful person than you are. He almost certainly knows more about preventing the spread of infectious disease than you do. He is almost certainly doing far more to protect the world from Ebola than you are.”

    http://www.vox.com/2014/10/24/7057535/the-new-york-ebola-patient-is-a-brave-and-heroic-doctor-stop

    This something more appropriate in Salon as click bait than on a site that presumes to be wonky and about policy issues.

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  4. jnc4p's avatar
    jnc4p, on October 24, 2014 at 1:25 pm said:

    Because they can’t handle the truth:

    “NYC Officials Lied to the Public Last Night. That Was The Right Thing To Do.
    By Noam Scheiber”

    http://www.newrepublic.com/article/119978/cuomo-de-blasio-lied-about-craig-spencers-ebola-thats-ok

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  5. jnc4p's avatar
    jnc4p, on October 26, 2014 at 3:00 pm said:

    Creative billing being driven by the ACA:

    “As Insurers Try to Limit Costs, Providers Hit Patients With More Separate Fees
    By ELISABETH ROSENTHAL
    OCT. 25, 2014”

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  6. Michigoose's avatar
    Michigoose, on October 26, 2014 at 3:38 pm said:

    Creative billing being driven by the ACA

    They’re employing the airlines model of pricing, evidently.

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  7. novahockey's avatar
    novahockey, on October 27, 2014 at 8:31 am said:

    what’s funny though is the airlines do that after deregulation, and the insurers are doing after more regulation. BTW, late congrats on the funding.

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  8. Michigoose's avatar
    Michigoose, on October 27, 2014 at 11:29 am said:

    Thanks, NoVA!

    As shrink always says, those healthcare silos aren’t going to go empty!

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