Monday Morning Cup of Coffee: KB Home CEO nails what's missing in housing
California bubbles, landlord headaches and forecasting failures
Monday Morning Cup of Coffee takes a look at news crossing HousingWire's weekend desk, with more coverage to come on bigger issues.
What’s wrong with the housing market? If you don’t have more than a minute, you may not want to ask this writer, but in a conference call on earnings last week, KB Home CEO Jeff Mezger got it in four sentences, and it’s been a constant refrain at HousingWire.
In a discussion with an analyst on the call, Metzger summarized the problem thusly: six years into the Obama “recovery,” the economy is still rubbish.
“What I was trying to point out in the cities — pick a Texas city because all four of the larger cities has solid job growth and real population growth going on today. And it’s because of the job growth we are seeing more first-time buyers,” Metzger said. “They are not – it’s a well heeled first-time buyer, but it’s not the high income first-time buyer like you would see in Orange County or up in Santa Clara County. So I think it’s because you have job growth going on in those cities and that’s within our own business we are seeing this.”
Boom, nailed it.
Speaking of Orange County and Santa Clara counties, housing bubbles and smooth segues, Dr. HousingBubble shows you what (cue Dr. Evil voice) $1 million will buy you in that neck of the woods, and – come on. This is not San Francisco, people. $1 million for 1,500 square feet (don’t salivate, New York) and 2 bedrooms? One thing is sure, when Toyota relocates its headquarters from Cali to Texas, transferring employees are going to think they’ve died and gone to rich people heaven. You can get that kind of home for under $100K in some places.
Hello all you newly minted mom-and-pop landlords. You know who you are – you’ve been driving home price appreciation and now you’re Mr. Furley from Three’s Company, only with single-family homes. Here’s a fun list of all the headaches that come with the territory, with a big dash of humor to ease the bite.
Everyone in the housing space engages in forecasting one way or another. It’s our version of sports talk between games. Some of us are cynical about the spin that accompanies such forecasting, and we all get it wrong sometimes. Know who may have the worst track record on forecasting? The Fed.
Last week the final first-quarter GDP was announced at a staggering -2.9% annualized. As recently as Dec. 18, 2013, the Federal Reserve forecast 2014 to be a great year of positive 2.8% to 3.2% GDP growth, with no negative quarters.
For those keeping score at home, that’s 16 consecutive quarters since the last time the Fed got a forecast right.
Realtors, agents, servicers and lenders, Motley Fool has some good insight for you. They look at the hardest challenges people face in affording a home. Knowing is half the battle.
The FDIC reports one bank failed the week ending June 27. The Freedom State Bank in Freedom, Oklahoma, was acquired by Alva State Bank and Trust Company.