Friday Update August 20, 2021
Roses are red, violets are black, 631 homes on the market, the inventory is flat as your back. 926 sales closed out month to date with a median sales price of $447,500. Interest rates are steady chilling near 6,000 year lows. Last August our median price here was $380,000.
New home starts are down 7% in July over June. If you watch the news they would have you thinking that this means the housing market is weakening. The only weak thing is the content of the news. Here is a graph for context:
See how even though there was a 7% dip month over month new home starts continue trending up for 9 years straight? That's because demand is strong, building a house right now is a massive pain in the ass, and builders are being cautious about overbuilding. Why would they want to saturate the market to the point where prices fall? That's not how you make money in this business. And I think builders still remember 2007-2011 better than most Americans. Reminder, gas was over $4.00/gallon in 2008.
Last year in mid September we saw inventory start to drop into winter, let's see if that repeats. We also saw a plateau in pricing between August and January, let's see if that repeats as well. The news seems to be repeating itself about the Covid, kind of like shit your pants fear 2.0. Let's see if that leads to another round or three of stimulus. If you hear about stimulus just know that housing will become even less affordable, and the gap between rich and poor will expand even further into record territory. The funny thing about it is that people will gladly cash their stimulus checks while simulatenously bitching about the price of pretty much everything. Never to make the logical connection that maybe getting money for nothing is the reason for inflation. But whatever.
Broke people with no assets always like to talk about timing markets and getting it just right. This graph below shows you the consumer price index of housing over time. This is basically how housing stands up to monetary inflation.
So as you can tell the best time to buy a house was on the far left of the graph, then you had a tiny buy the dip opoortunity around 2009ish, and the worst time to buy a house is today! However do you think this 60 year old trendline is going to reverse soon? What do you think it would take for that to happen? And how much rent are you willing to pay before you realize that the best time to buy a house is when you can afford to do so in a city you plan to live in for a while?
Long story short guys the market is still heavily in the favor of sellers, inventory is still extremely short, interest rates are still stupid low, and buying a house now is probably something you won't regret 10 years from now regardless of what the market does or doesn't do in the short run.
Have a great weekend and thanks for reading these rants, long and short.