Morning Report – The dearth of starter homes 6/2/15

Stocks are lower this morning as European stocks and bond fall on some strong inflationary numbers. US Treasuries and MBS are lower as well.

Looks like we have dueling proposals to address the Greek situation. The parties are still a ways away from agreeing to anything.

The ISM New York fell to 54 from 58 last month. Factory orders fell 0.4% in April.

Economic Optimism fell to 48.1 from 49.7, according to IBD / TIPP. A reading of 50 is considered neutral, so consumers still feel slightly depressed about the state of the economy. If you dig into the data, the mood about the economy in general is somewhat negative, people’s personal financial situation are slightly positive, and their view of government economic policy is highly negative.

May auto sales are coming better than expected. Ford is still negative, while Chrysler Fiat is up small. GM was up 3%. Surprisingly, this is the best May in 8 years. That said, with the average age of a US car at 11.4 years, I guess the comps are pretty easy.

An interesting stat demonstrates the lack of starter homes on the market. 10 years ago, about a quarter of new homes had 3 or more bathrooms. Today, that number is 36%. The average size of a new home has increased by something like 140 square feet since the crisis. If you look at the homebuilders, Toll Brothers has been seeing all the action, while the more diversified builders like D.R. Horton and Pulte are only recently beginning to focus on the first time homebuyer. Here are all sorts of fun facts about new construction, courtesy of the Census Bureau. This speaks to both sides of the income inequality debate that has been raging in Washington. If you are an aging baby boomer with assets, QE has been very good to you. If you are a Millennial, the results are mixed at best. You had a very narrow window to pick up a bargain in the real estate market and it closed very quickly. Now house prices are again over their skis relative to incomes. In fact, Bank of America is expecting slightly negative house price growth in 2017-2019 as income growth fails to materialize. What is a Millennial with a bunch of student loan debt to do? Go to Atlanta, Dallas, or Houston.

20 Responses

  1. Automation Watch: College professors are next.Lots of them are already paid just barely more than fast food workers anyways.


    • yello:

      Lots of them are already paid just barely more than fast food workers anyways.

      And lots of them are overpaid at that!


    • From the article:

      Rather than being a form of prestige, tenure would really just evolve into a form of job protection and social guarantee.

      Isn’t that what it is already?


  2. if rote memorization of accepted worldviews is the point of college, why not robots?


  3. Why? Any celebrity who admits to being Republican is gutsy indeed.


    • Brent:

      Any celebrity who admits to being Republican is gutsy indeed.

      A good point, although somehow I doubt that ESPN is celebrating that particular display of courage.


      • Transabled: Not, apparently, a parody.

        When he cut off his right arm with a “very sharp power tool,” a man who now calls himself One Hand Jason let everyone believe it was an accident.

        But he had for months tried different means of cutting and crushing the limb that never quite felt like his own, training himself on first aid so he wouldn’t bleed to death, even practicing on animal parts sourced from a butcher.

        “My goal was to get the job done with no hope of reconstruction or re-attachment, and I wanted some method that I could actually bring myself to do,” he told the body modification website ModBlog.

        His goal was to become disabled.

        And, just when you thought our descent into the twilight zone of progressive-speak couldn’t go any deeper, introduce yourself to….body diversity:

        “It’s a problem for individuals because it’s distressing. But lots of things are.” He suggests this is just another form of body diversity — like transgenderism — and amputation may help someone achieve similar goals as someone who, say, undergoes cosmetic surgery to look more like who they believe their ideal selves to be.

        But wait…transgenders are not pleased. They’ve struggled too hard and long to redefine their own particular disorder as not a disorder to be lumped in with such disturbed people.

        But this has been met with great resistance in both the disability activist community and in transgender circles, argues Baril, a visiting scholar of feminist, gender and sexuality studies at Wesleyan University in Middletown, Connecticut….

        Baril — who is himself disabled and transgender — believes the transgender community distances itself because it has worked very hard to de-pathologize what’s known as ‘gender dysphoria,’ and sought its removal from the Diagnostic and Statistical Manual of Mental Disorders.

        Transability is also known as Body Integrity Identity Disorder, which was only just added to the “emerging measures and models” appendix section of the DSM-5 in 2013. Many transabled people want to see it fully added to the psychiatric bible because it might legitimize their experience in the field of medicine, Baril notes.

        I ask you…how can this NOT be an Onion parody?


  4. I’ve heard of that. but not from a disability standpoint, just from a mental illness one. like you’ve got a serious mental health problem b/c you want to cut off a limb.


    • nova:

      like you’ve got a serious mental health problem b/c you want to cut off a limb.

      Today’s mental health problems are tomorrow’s celebrated diversity.


      • Jeffrey Toobin, proving he knows nothing about the Bill of Rights and even less about libertarianism. He thinks that when the government dictates to a business who it can and can’t hire and why they can and can’t hire them, it is an example of the “the libertarian roots of the Bill of Rights, especially the First Amendment” being on display.


        • BTW, this just proves what a screwed up country we live in, when the government forcing a business owner to engage in business that he explicitly objects to on religious grounds is not considered a violation of religious liberty, but when a business owner declines to hire someone because they won’t conform to his dress code, it is considered a violation of religious liberty.


  5. “ScottC, on June 2, 2015 at 12:43 pm said:


    like you’ve got a serious mental health problem b/c you want to cut off a limb.

    Today’s mental health problems are tomorrow’s celebrated diversity.”



  6. NoVA – it’s always amusing to me how hard it is to get basic facts to penetrate the consciousness of the supposedly fact based side.


  7. Good perspective on the Hastert indictment:

    “It isn’t illegal to withdraw money from the bank, nor to compensate someone in recognition of past harms, nor to be the victim of a blackmail scheme. So why should it be a crime to hide those actions from the U.S. government? The alarming aspect of this case is the fact that an American is ultimately being prosecuted for the crime of evading federal government surveillance.

    That has implications for all of us.”


    • jnc:

      An excellent analogy from your link:

      What if the government installed surveillance cameras on various streets in a municipality and then made it a crime to walk along a route that skirted those cameras?



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