Friday Update August 13, 2021
What up! It's Friday the 13th and the only thing scarier than the Delta variant, forest fires, inflation, an anemic government, general lack of representation for the American people, a fascist government ran by corporate lobbyists and the cost of gas is that there are only 631 single family homes on the market.
You can see the mountains again, and you can see that we are now stuck in an inventory range for the last month of about 600-650 homes on the market, on Fridays. Another thing I keep seeing while showing houses is those nasty ass white license plates with that red word "california" on them. Seems like the fine folks of the Golden State are not done leaving. Another state has equally bland white tags, has the word "texas" on them, and a lot of folks from there seem to be struggling with double yellow lines and merging onto highways in Colorado.
Yo I keep hearing agents complaining about how slow showings have been. I keep hearing about this market slowing down. I keep hearing all these stories and on my very small cross section of my 3 listings in the last 10 days everything flew off the rack. Full price or over with a ton of interest, even on properties that were priced with a full batch of optimism baked in.
Also I've been running around with a number of buyers. From 400k to 800k seeing multiple offers on all the nice houses that are priced correctly. Seeing poorly kept homes with inflated prices sit on the market. Good. But again everything that is priced right and marketed well is going quickly and at a premium. You guys correct me if I'm wrong here, but first make sure to correct your listing prices if the shoe is fitting right now.
Big picture stuff. For all the time that agents and lenders spend talking about rates shooting up they sure are, NOT. We've got the 10 year yield at about 1.3% to finish out Friday and that is well below the 1.75% we saw at the end of March. Mortgage rates are not the cheapest in history but they are damn near that. Historically speaking going back to like the days of the Romans anything under a 5-6% rate is a gift.
Month to date 558 sales in our local MLS, median price is $450,000 and average is $509,000. True prices are not longer sky rocketing, not true that there is any serious relief for buyers in this market. Still gotta bring the A Game dudes and dudettes. At this pace we could easily see median pricing into the high 400s-low 500s by next summer. All depends on how much money our "government" borrows from the Central Bank. Luckily my 11 month old son has no say in the amount of debt we put him and his generation into. They'll figure it out, for now we ball out!
Lumber trading around $500/1,000 board feet. Down from $1,700. Amazing and very welcome news and would love to see it even closer to $400. I just wish that lumber was the only thing houses were built out of because then new builds could come down in price. But that's not the case and prices dropping on new builds isn't the case either. You know what else isn't dropping? Rents.
According to statistics which are 100% accurate when presented by a credible expert (me, its my page) rents have climbed a staggering 11.4% YEAR TO DATE in 2021. For comparison the 3 years prior to the pandemic saw annual rent hikes of about 3.3% per year. We're looking at over 20% this year at this pace. Boise, ID saw their rents increase by 39% in 2021 thanks to all those bland white license plates moving there. Luckily the Springs isn't as cool as Boise and our rents are only up low double digits. So yea, buying a house is not super easy and is kind of expensive, but renting a house is not super easy, is pretty expensive and you get no equity in return. So there is that. The statistics are from a report by apartmentlist.com.
I wanted to go off on this follow up rant about Covid 19 and it's impact on monetary policy and asset prices but I'm only going to put the tip in. I don't care what your position is on vaccines, or which science you choose to follow. There is a simple economic truth that the headlines of this virus were exploited to create a shit ton of new money that was added to the supply in the form of stimulus, bail outs, and straight up cronyism. That is the inflation that you all see and feel today.
If you're watching the news now and you fail to see the connection between the super scary variants and the fact that we need to justify a 3.2 Trillion dollar deficit then hook me up with the shit that you're smoking. Cause this is stressing me out. I would expect to see FDR 2.0 aka President Dude to make his best effort to print our way to prosperity, and the worse the news looks the easier it is to direct people's eyeballs away from what's happening.
On a more positive note though lets look at some massive winners from this whole mess.
Housing up over 25% since the start of the pandemic.
Moderna stock in January 2020 was trading at $4 per share. Today it is $390. FML for not investing in this, I wouldn't have to show any more overpriced turds or manage human emotions for a paycheck...another opportunity missed, and my pride is what I'll have for lunch after this.
Pfizer same time frame went from $26 to $48.
Johnson and Johnson despite making a vaccine that sounds like it's pretty shitty went from $143 to $176 a share.
AstraZeneca which isn't even being pushed anymore went from $48 to $58 a share.
Meanwhile the median American household income (for a family) went from $78,500 to $79,900 from 2020 to 2021.
So yea, if you are still renting maybe you should consider buying. Timing the market is the stuff of legends, and unless you're a legend, you should probably stop trying. Try to look past the headlines and follow the money. Who benefits? Why? And how can you benefit too?