?No bubble? in Southern California, says luxury homebuilder Toll Brothers

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?No bubble? in Southern California, says luxury homebuilder Toll Brothers

While Toll gave no exact sales details within the state, the homebuilder noted that its Parkside project near the new sports park in Lake Forest has already been seen by 3,000 visitors in its first two months of selling. As a result, Toll has taken deposits on 56 homes at Parkside at an average price of $1.2 million.
http://www.ocregister.com/2017/08/2...fornia-says-luxury-homebuilder-toll-brothers/
 
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
 
Liar Loan said:
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
Click to expand...

BRING IT ON !!!!
 
Liar Loan said:
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
Click to expand...

Doesn't real estate outperform in a stagflation environment?
 
Liar Loan said:
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
Click to expand...

A lot of words, but you aren't really saying anything most people who follow financial markets don't know.

What will cause a rate shock? When will it happen? Might as well say eventually there will be a recession and asset prices will drop.

I'll save you some time. Next time just say, there will always be bubbles. Most won't know it's a bubble until it pops. When it pops assets will drop. Be careful!!
 
Rtlguru said:
Liar Loan said:
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
Click to expand...

A lot of words, but you aren't really saying anything most people who follow financial markets don't know.

What will cause a rate shock? When will it happen? Might as well say eventually there will be a recession and asset prices will drop.

I'll save you some time. Next time just say, there will always be bubbles. Most won't know it's a bubble until it pops. When it pops assets will drop. Be careful!!
Click to expand...

IF Korean war breakout. Look out for rate to drop. The way Kim Jung-Un running. It will be an all out war with North Korea sooner or later.
 
Toll Brothers say no bubble, so that settles it I guess.

In fact, I'd go so far as to say Central Banks have learned how to prevent recessions from ever happening again. Credit/debt can never stop growing.
 
The "Bursting of Bubbles" is the best time for wealth building when everything goes on sale so waiting for that next opportunity.  :D
 
Liar Loan said:
There is a giant bubble but most people don't recognize it... yet.  The bubble is not in real estate, not in stocks, not in bitcoin, or commodities.  No, when every asset class is overpriced simultaneously like they are now, it means the bubble is in the money.  The bond market is the largest financial market we have, and it is in a ginormous bubble that dwarfs every other bubble in history, but most people don't recognize it.  In fact, they celebrate low rates on mortgages and other debt which helps to perpetuate the bubble even further. 

Eventually, there will be a rate shock and it's going to cause a bear market or outright crash in every other asset class.  Nothing will be spared and cash will be the only safe haven.... maybe.
Click to expand...

Bond rates aren't going up because there isn't a lot of inflation out there.  Sure, if the Fed jacks up rates above 2.5-3% then yes it'll slow us down.  The reason why we haven't gotten big inflation with the low rates and QE is because lenders haven't loosened up like they did back in the early 2000s.  I'm sure many know how much of a pain in the behind it was to get approved for a loan/refi because I sure do...felt like I was getting probed.  Also look where rates are at in Europe and Japan...even lower than ours.  I think I've said it before, but we will become Japan 2.0 with low growth and low inflation for years to come.
 
HMart said:
Doesn't real estate outperform in a stagflation environment?
Click to expand...

During the late 70's real estate did outperform during stagflation, but once the Fed got serious and increased rates in the early 80's there was a 5 year bear market.

Compressed-Village said:
IF Korean war breakout. Look out for rate to drop. The way Kim Jung-Un running. It will be an all out war with North Korea sooner or later.
Click to expand...

True.  Rates have already dropped in the past 2 weeks because of it, but conversely, what happens if a peace with Kim is brokered?
 
Going further out in time, there will be inflation after these storms clear. Lumber, Labor, Lowes, all of the building trades are going to be killing it over the next two years getting everything cleaned up. If 30 percent of drywallers head to Houston or Miami for all the work at a high price, what then happens to everyone waiting for their Eastwood home to be completed back here? Already some builders have said their delivery dates are being pushed out because of labor issues. To be clear, I think that excuse today is a smokescreen. In 6 months? Not so much.

Wage and commodity prices will push inflation past Fed preferences early next year which will make for interesting times IMHO.

My .02c

Soylent Green Is People
 
USCTrojanCPA said:
lenders haven't loosened up like they did back in the early 2000s.
Click to expand...

Lenders are open for business and ready to loan. Our entire economy depends on credit/debt growth. If it stops, so does the global economy.

As you can see from the chart in this link, if debt even flat-lines (see 2007), then big trouble.
https://fred.stlouisfed.org/series/TOTBKCR


For those of you that still believe that loose lending (subprime) crashed the global economy...and that credit is now tight, this article is a must read.
https://qz.com/1064061/house-flippe...ot-poor-subprime-borrowers-a-new-study-shows/
 
Halos said:
USCTrojanCPA said:
lenders haven't loosened up like they did back in the early 2000s.
Click to expand...

Lenders are open for business and ready to loan. Our entire economy depends on credit/debt growth. If it stops, so does the global economy.

As you can see from the chart in this link, if debt even flat-lines (see 2007), then big trouble.
https://fred.stlouisfed.org/series/TOTBKCR


For those of you that still believe that loose lending (subprime) crashed the global economy...and that credit is now tight, this article is a must read.
https://qz.com/1064061/house-flippe...ot-poor-subprime-borrowers-a-new-study-shows/
Click to expand...

Interesting article but the bubble was due to these "flippers" like that stripper (from the big short) who bought multiple homes with no-doc or low-doc loans with 0% down and/or option arms.  Sure, many of those home buyers had good credit and weren't sub-prime.  They were buying because they thought that prices would go up forever...once prices started falling the sub-prime market was the first to go along with the 0% down and option arms borrowers (aka the weakest links). 
 
USCTrojanCPA said:
Halos said:
USCTrojanCPA said:
lenders haven't loosened up like they did back in the early 2000s.
Click to expand...

Lenders are open for business and ready to loan. Our entire economy depends on credit/debt growth. If it stops, so does the global economy.

As you can see from the chart in this link, if debt even flat-lines (see 2007), then big trouble.
https://fred.stlouisfed.org/series/TOTBKCR


For those of you that still believe that loose lending (subprime) crashed the global economy...and that credit is now tight, this article is a must read.
https://qz.com/1064061/house-flippe...ot-poor-subprime-borrowers-a-new-study-shows/
Click to expand...

Interesting article but the bubble was due to these "flippers" like that stripper (from the big short) who bought multiple homes with no-doc or low-doc loans with 0% down and/or option arms.  Sure, many of those home buyers had good credit and weren't sub-prime.  They were buying because they thought that prices would go up forever...once prices started falling the sub-prime market was the first to go along with the 0% down and option arms borrowers (aka the weakest links).
Click to expand...

Flippers caused a big problem in 1989 too. Eventually supply exceeds demand and then the flippers get caught in something that isn't quite so liquid having to cover carrying costs and oops.
 
That article needs some clarification of terms, but they are on the right track.

"Flippers" as we know them today, are novice investors hoping to sell refurbished homes at a higher price. I can't say I saw many "Flippers" who spun their recently purchased home off to someone else for profit. Most of the wreckage I saw were from over leveraged slumlords who scooped up homes in the IE, Las Vegas, and the Phoenix area to rent out. Once the free flow of cheap refi money seized up, home sales cratered and interdependent businesses (realtors/lenders/title companies/notaries/escrows, etc) began to lay off. This rippled out into car, boat, home improvement and restaurant industries. When LO's stop bringing in $20k paychecks on a per-loan basis, tables at Morton's Steakhouse tend to free up.  Yes, at the time you could make $20k per loan if you played things right....

"Subprime" is a type of lending, not a type of borrower. Some of the richest people I've worked with have sub 680 FICO scores. They aren't subprime, but needed that kind of lending to do what they were wanting to do.  "Alt-A", "Low Doc" etc were all part of the bigger "Subprime" loan pools disguised as "Prime" mortgage securities that crashed and burned. Little addressed were the serial refinancers, those who traded purchase 30 year fixed, for a cash out 5-1 ARM, then a cash out 2/28 ARM, then finally for another cash out Option ARM. It's those borrowers habits that eventually led to the inflection point within the whole Ponzi scheme of 2002-2007 lending, causing the music to stop and the crash to begin IMHO.

Thanks for reading, 
 
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