Friday Update 9/11/2020

I remember 19 years ago sitting in a chemistry class at Palmer High School thinking we were in for some kind of cruel fire drill.  Then they wheeled in the TV on the old school metal cart into the room and had the news on repeat showing the planes hitting the buildings.  I doubt any of us will ever forget that day and God willing our children never have to see anything like that again.  Love each other, take care of each other, embrace the differences in life and grow through it.

On the real estate tip guys it's not getting any easier out here.  592 Single Family Homes.    Like I said a couple weeks ago I would not be surprised by a declining level of inventory between now and February.  I pulled month to date sales stats and our median price is continuing to push upward right now just over $389,000.  I've gone into the reasoning for this in depth before but it comes down to short supply and high demand both driven by extremely low interest rates.  I've got 2 closings today with rates below 3% on both.  Rates are stupid low and according to both the European Central Bank and the wizards at the Fed we should expect low rates for years.  So when some thirsty Realtor or lender starts singing to you about rates going up next year tell them to shut their greedy pie hole.

The reality of interest rates is that they are interconnected.  Mortgage rates mirror the rates on treasury bonds which dictate the amount of interest the United States of America pays on it's loans.  You know the whole debt ceiling thing?  And how the government shutdowns either happen or get avoided every so often?  That's all due to debt.  

The US right now has a national debt of 26.75 Trillion USD.  We as a people all pay interest on that debt.  Whether we pay that interest through demands of austerity or through inflation or higher taxation rates we pay it regardless.  The US is in a unique position where our central bank, the Fed, is able to create the dollar out of thin air to essentially devalue our national debt.  It's kind of like paying off a credit card with another credit card, and when the going gets tough taking out yet another credit card.  

Is Iggy about to go off on a rant about inflation?  No, I'm too tired dudes and dudettes this kiddo did not let us sleep last night.  But the idea is simple and plain.  If rates go up the US as a nation takes it in the shorts.  It's not just mortgage rates, its the rate on the national debt and everything else.  Since we already as a country can't afford to run this country then we for a fact can't afford to pay more to service the existing and rapidly growing debt.  We're rocking a 3 trillion dollar annual deficit right meow!

The last time we had a set up like this in rates was in the 1930s.  The 1930s are often called the lost decade when it comes to markets.  No real growth, stagnation, nationalism and then you know that one thing with Hitler and the big booms.  When I was a kid the Great Patriotic War as it is called in the former USSR was painted to me as a national duty, a fight for the survival of our race.  And that wasn't a lie but it also wasn't the whole story.  

It's easy to think of Pearl Harbor, the heroic charges of soldiers on Omaha Beach, the killing fields of Kursk and the death camps all over Europe.  Thinking of WW2 as the last tremendous financial reset is a much less glorious, much less patriotic and to me extremely infuriating.

It's infuriating because we are repeating our own mistakes and doing so with a jingoist passion.  I'm not saying we're destined for another World War although it would not surprise me.  What I am saying is that we are destined for another financial reset.  And why would I as some run of the mill fairly average Realtor dude go into this topic at all?  Because real estate, the land, holds up through the worst parts of human history.  

Legacy mindset guys.  Generational wealth.  Who gives a shit about the dollar and what its worth today?  I'm sure your grandparents would trip out if you told them a loaf of bread would cost 4 bucks but here we are paying it.  Soon enough we will all be someone else's grandparents and I'd like to be the cool laid back grandpa dude who built a foundation for my fam.  Real estate is how I'm doing that.  You can too.  Stop bitching about today and start thinking about tomorrow :)

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