Esque

Let's just get past Brazil first.

Higher home prices = higher monthly mortgage payment, property insurance, and property tax or total monthly housing payment. Higher total monthly housing payment = higher Owner's Equivalent Rent ("OER"). OER is the measure of how much an owner would pay in rent to equal their total monthly housing costs. OER is a main input and driver into CPI. Therefore by definition higher home prices result in higher CPI in a stabilized borrowing costs environment. There's also secondary knock on effects that tend to be inflationary. For example, the higher the total monthly housing payment, the more rent can be pushed at for-rent properties because the relative attractiveness to ownership increases. Likewise, this all tends to bleed into the labor market as higher monthly housing costs (either ownership or rent) means higher demand for wages.

ECI and Case Schiller up above expectations this morning. Assume key rates will respond higher today. Hold your breath.

@Muny_Tex, I understand this line of thought but I believe the public does not fully appreciate the increase in input costs over the last several years. Specifically, as it relates to #4. A few thoughts. The price of land peaked in 2021, but has not decreased materially since then. Land owners are largely debt free with little carrying costs due to agricultural exemptions and thus are well positioned to increase their hold period. Further, most land owners are not sophisticated, so they do not think in terms of opportunity costs, i.e. sell today and re-invest in $SPY or some other financial product that would yield better results long-term. As a result of this market dynamic, those that want to break ground on a new project are having to pay up on the nominal price and then subsidize that higher input costs with some sort of seller financing, increased time period before closing, or etc. Entitlement periods are increasing dramatically. What used to be a 9 to 12 month period in DF/W is now 15 to 18 months and increasingly stakeholders are beginning to underwrite 18 to 24 months as things become more difficult. I am hopeful the new legislation w.r.t. de-annexation of ETJ may alleviate some of these pressures, but that will take time. Time is money and with higher rates there is higher cost of capital and thus higher input costs for this time. Developers need a minimum return to make it worthwhile to pursue these risks and thus this all gets baked into the final land / lot price. Hard costs on horizontal development are up more or less 40% since 2019. There is a significant lag between the actual increase in these input costs and that reflection in the end market. The next generation of finished lots are already much more expensive purely as a function of increased hard costs. Lots that were under contract in the first phase of a project for $1,000 / FF are now $1,800 / FF - so your 50' lot went from $50k to $90k a finished lot. This next generation of lots will be coming online in 2025 - 2026. Hard costs on the vertical construction have increased dramatically. This is experienced more in real time, but needless to say this is reflected in the gross margins, which have come down from 30%+ to 20% - 25% in the last 12 months and are heading back to 20% gross, 10% net. This is all to say, Builders will do what they need to sell homes, including cutting prices. But I'm (unfortunately) not holding my breath much will change in the next few years purely as a function of higher basis in actually delivering a home today as compared to a few years ago. There's a delayed inflation input effect that's not being appreciated because the reality is it takes years for these projects to come out of the ground and to flow through the final input good - the finished home. Just my two cents as a developer.

I strictly follow the US10Y. Wild to see it back up at 4.70% this morning. Seems like it wants to head to 5.00%. We're only in April and no cuts on the horizon until late summer / early fall. Also, I despise this is the market real estate market now. Everyone is obsessed with the Fed and the key rate because everyone is putting rate bets on. Need to end pretend and extend, wash out the losers, reset values, and move on.

Yes - love it. Hope they can run the table and beat teams by 20. They have the fire power. Also, first time it seems there's some excitement / focus on getting a gold after recent debacles where nobody wanted to play or they just wanted to goof around.

March Madness has ended and the NBA regular season will follow in a few days. Feels like the right time to set our sights on the upcoming summer Olympics. Team USA has landed in Group C with Serbia, South Sudan, and TBD which means Team USA is going to have to overcome Joker to open the games. The biggest question to date is who will be Team USA this go around. Obviously hoping for a "Death Squad" this go around with names like LeBron, Curry, Durant, Booker, Davis, Butler, Embiid, Tatum, and so forth. Don't believe we have any final confirmations - yet. We'll see. If Team USA gets the right players in the lineup and actually focus on winning the Gold, this should be fun. Can't remember the last time I looked forward to basketball at the Olympics to this degree.

The other side of the argument could be that agents have artificially increased asset values in residential. If you purchased a home a year ago, you needed a minimum of a 6.5%+ asset appreciation just to break even on your capital value as commissions were 6% off the top. Now that each side has to pay for their own representation, I expect agents will get squeezed in their fees. Honestly, the $35k in commissions we paid is an absolute joke relative to the work the agent/s did. Contracts are so standardized today in Texas. I'm sure some attorney out there would be willing to offer a service such as $500 / contract. Takes all of 10 minutes to write it up. Most of the sales and marketing today is really done online. So likewise, I'm sure over time there will be a service to manage showings / open houses. I truly believe to date there's been a lack of this because the agents have operated more as a cartel and have blocked efficient market participants out of the process. That's from inspections, loans originators, title companies, and so forth. A more open and transparent process is probably a net win for consumers long-term and a loss for agents. Which means less agents as fewer survive. Nothing wrong with that, imo.

Wow. An actual thoughtful, well formed response by @Muny_Tex. I had to double check to make sure I was on Shaggy and not some other forum. Question for all of the LO out there. How does your compensation work? More specifically, seeing home builders buying down rates and being told LO are contributing to those rate buydowns. Wouldn't that completely destroy your compensation? For example, at closing paying 6 points to buy down the rate from 8.00% to 4.99%. Builder comes up with 4 points and LO comes up with 2 points. Does that make sense / is possible? What am I missing here? Would not think LO have enough room to pay that amount for the business.

Is traditional Halloween fading away versus what it was say 30 years ago? We have young children and are starting to get into that phase of life. A few observations. There are a lot of events we are invited to that are "safe spaces" for trick or treating. Our church threw a "Trunk or Treat" where families from the church decorated the trunks of their cars and parked side by side in the parking lot. There were maybe 75+ cars this year and no less than 500+ kids. Our daycare facility held a "Trick of Treat" event at the daycare. We did not go. Our City hosted a "Spooky Square" event where businesses and households line up around the old town square to hand out candy and toys. We've been invited to half a dozen other, similar events through family and friends. There are a lot less houses in general that are participating in Halloween. On our street maybe three of the 25+ houses have their lights on and hand our candy. As a result, we don't get many people coming through. There's one stretch in our subdivision - just one - where the neighbors are older and have come together to activate that stretch of 20 or so homes, i.e. everyone is committed to lights on, music on, decorating, and so forth. So that tends to get any traffic. Weather seems to be increasingly an issue. Looks like it will be mid-40s and rainy this year. I understand as a parent opting for other events, which have weather contingency plans baked in, to get that Halloween fix for the kids. I don't remember this when I was younger. Change in society / culture? Or just now observing what has always been the case?

Throwing him out in the first player is a joke. Soft as dog shit.

This is a poor comparison. The Nazi Party in Germany was a far-right, fascist political movement that only lasted 25 years from inception to dissolution. The norms of the practice of Islam in this geographical region have existed for thousands of years. A better comparison that still pales in comparison to historical magnitude is the practice of State Shinto in Japan, which required abolishment by the Allies by decree after World War II. I don't see how you're going to remove the norms of the practice of Islam in this geographical region. It seems the best case scenario is you'd migrate it to other, nearby countries. This is not feasible. Under immense international pressure they pulled out of Gaza in 2005. We know the rest. They are not going to be willing to potentially repeat the same decisions. The United Nations is not equipped or positioned to manage such a situation. That is not even remotely feasible. What force? No one is going to sign up for that role. This is not realistic or feasible. Wasn't this, somewhat, the approach with Gaza and the West Bank? How do you execute on nation building without occupation? For example, how do you prevent the excavation of water and sewer pipes? Who is going to enforce that? At this point it seems more likely Israel is going to have to transition to full occupation and enforcement in the short-term to stabilize the region. Where they go from there and how they manage those areas in the future are TBD and will be the topic of much discussion. As others have stated, it seems like some sort of integration may actually be the better long-term solution given history. It will still be problematic for Israel given it's geographical location and neighbors, but perhaps they have a better shot at integration and stabilization long-term.

This is horrible, horrible, horrible advice. A great way to lose a lot of money. Many of those deals are so underwater and $ABR is heavily collateralized via repo lines and CLO issuances. If anything, I'd consider buying putts to short them. Shitco.

If you have to ask, bad idea. Getting yourself into a world of hurt. Go throw it into $SPY and look at it 30 years from now. Will probably outperform and save you time and headache.

Dot plot was updated and Fed pushed the two projected rate cuts in 2024. Market is having to come to terms with higher for longer. Remember that less than 6 months ago the market thought the Fed was going to cut 50 bps by year end 2023. The reality is no one actually knows with a certainty, but market is having to adjust on current information, which means US10Y should continue to trend towards 5.00%. Private investors are loading up on long duration treasuries at the moment, which is helping them catch a bid / keep the rates down, relatively speaking. But Treasury still going to dump a lot more in the market. Curious / concerned where the demand comes from in say November / December as they push to fill up the government's piggy bank.

Also disheartening the forward curve is, more or less, moving in unison. Over the last 30 days the US2Y is up 22.8 bps, US5Y is up 16.6 bps, and US10Y is up 29.4 bps. Would have hoped to see some better progress on un-inverting the forward curve. With the US2Y at 5.12%, seems like the US10Y still has room to run.

I follow the US10Y like a hawk because it has the most impact on my business. The 5.10% was a miss print over night. I have the screen shot because I sent it to an investment banker late at night to see what was blowing up. But was nothing. My bad.

US10Y jumping to 5.1% overnight... yikes!

For real... and I don't even follow bonds. Spiked last night and woke me up with an alert. Wonder if we clear 4.50% on the US10Y today.

"... now the Texas Senate looks corrupt." Excuse me? Looks corrupt? We've basically just shown our ass and stated that as long as our party is in power, the laws and rules no longer apply.

I feel shame and disgust. Taking names now and will vote against any of these folks seeking re-election. I just can’t fathom how we landed here.

Came here to say, "we are now full circle to the title of this thread, see you next year." Losing to a team with 43 wins (who are moving markets and could care less about the rest of the year) in the ugliest uniforms ever. Also, the new TX logo sucks. Go back to the normal T logo in red or blue. Team looks like a busch league Rice out there.

What is up with this guy's suit? It is so ill fitting it's comical.

Went to the game last night and it was depressing. As if getting swept wasn't bad enough, allowing 39 runs in three games literally made my stomach churn. Sad times.

Looking forward to casting a vote against Tan Parker in the next election cycle. What a shit representative.