Friday Update April 15, 2022

Oh my goodness say it ain't so we only have 395 existing single family homes on the market today.  That's 60 less than last week and again we could make a big headline out of it!  15% drop in inventory, wow, how high will this market go?  Get in now and let the FOMO take you over!  

Remember, today is the best time to buy or sell, mostly because your agent's taxes are due and the mortgage is late after the 15th.  Don't buy into desperate sales people's meandering opinions of the market that shift together with their bank account balance.

I'm not the only agent here locally that's noticed a change in rhetoric on the social media.  Other producing agents have pointed out that the very same people that have been hyping how great the market is last month are the ones calling for a market crash this month.  For any agents reading this, please, remember this.  If you're having a shitty month that doesn't mean that the market is crashing.  If you're having a great month it doesn't mean that the market is booming.  In the words of one of my friends who has been selling real estate for close to 30 years "agents are the worst barometer of the market" because they base their opinion on how their checking account looks.  Maybe you spend too much?  Maybe you don't work hard enough?  Maybe you suck at your job?  That's not the fault of the market.

You know what is a great barometer of the market?  Statistics.  I like statistics.  

Month to date, March contracts closing out, 586 homes sold in our area.  Median price is at $486,250, a fresh record.  This time last year our median was $425,000 and in 2020 it was $360,000.  So about 14% higher than last year on top of an 18% yoy 2020-2021.  Is this rate of growth sustainable?  I don't think so.  I mentioned a few months ago that in 2022 if we see 5% total price appreciation January to December that I would count that as a win.  It's funny because at that point I cited Zillow's price forecast for 2022 of over 20% growth, but now I just checked into their forecast and it simply says "no data".

Maybe don't trust a shitty algorithm with a large investment such as your home.

What I like to nerd out on after my son falls asleep or in whatever free time I have is big picture stuff.  Many of us have never lived through inflation like this, but its nothing new.  Most of us haven't lived through a period of time where nations grow more isolated and move away from globalism.  Yet it's nothing new.  And probably hardly any of us thought we would live through a pandemic, but here we are, most of us anyway, on the other side of it.

Most of us did live through 2008 though.  A lot of people here in the Springs lived through the crash of 1988 where COS was the foreclosure capital of America.  In the fallout of that houses were being sold in south east COS for like $10,000 to $20,000.  And I imagine at that point people felt like they were paying full price or even overpaying.  During the crash of 2008 and into like 2012 it was easy to find houses in those same areas for around $100,000 or so.  And today if you're lucky you can snag a turd for around $275,000.

What's my point?  It's all relative.  It's not just housing going up, its the dollar going down in value.  It's so easy to talk about equity, value, how much money you're making in terms of dollars.  But what if we fix that to let's say gold and then compare real estate valuations to gold, since it doesn't do anything, its just gold.

The median house in El Paso County cost 270 ounces of gold in June of 2018, 254 ounces in June 2019, 200 ounces in June 2020, 230 ounces in June 2021, and 246 ounces of gold for the median house in El Paso County today.  So is the market really running away?  Or are dollars just losing value faster than we would like to admit?

Interest rates are at their highest level since like 2006/2007.  Of course this is headline worthy and people are starting to pull at their hair about it.  It's gonna be 2008 all over again!  Probably not, because we have something like 16 times less inventory on the market than we did back then, and something like 15% more population.  

Will buyers be priced out by rate increases.  Yeah, many already are.  Will seller's be priced out and stuck in their homes, subduing inventory further?  Yea, many already are.  And it's nothing new really.  This is just a symptom of the wealth transfer taking place in this country.  You all the heard the saying the rich get richer while the poor get poorer, well it's still true and it's pretty damn evident.

While the left is up in arms about a $15 minimum wage and the right is relentlessly bitching about taxes the rich find ways to take an ever larger slice of the pie.  The rising interest rate environment will for sure cool the market a bit, which is why I'm calling for 5% gains instead of double digits, but I don't foresee a crash.  There is simply too much money in the market.  Last year 30% of all homes nationally were bought using cash, that's the highest level since 2014.  This means that closed to a third of all the transactions in the market aren't even rate sensitive and are only focused on returns.

If you're a tenant what that means is that you should not expect rents to soften up anytime soon, if ever.  And again its not because your landlord is evil, its not because the market is unfair, its not because anyone hates you.  It's because the only way for this house of cards to stay propped up is by printing more money, which in my opinion is exactly what we're about to see a lot more of, I just don't know what new crisis they will blame it on.  

So yea, today is the greatest day to buy OR sell if that is what you NEED to do and can AFFORD to do it.  My taxes are paid up folks, I'm not going to push you to do anything, but I'll do my best to keep it real with you.

 

 

 

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