Friday Update August 26, 2022

Hey guess what happened this morning?  I was like 1000 words deep into this update and my almost 2 year old son demanded to come up on my lap.  I let him.  He pressed the round button with the red ring around it on my computer and poof, there went the update.

So this is gonna be the cliff notes version.

Inventory at 1,741, slightly below last week and on a plateau over the last 3 weeks.  I think this can be attributed to kids going back to school.  I think we may see a slight surge in inventory over the next few weeks before it levels off or maybe even drops into winter.

Jerome Powell spoke today.  He basically told America it's time to button down the hatches.  He said shit is gonna get worse before it gets better.  He said a lot of other things too but basically the idea is the Fed is super duper serious about defeating the inflation they created so tighten up your wallet and your butthole because it could be a wild ride.

The Dow Jones dropped over 1,000 points because the promise of more easy money seems to have been taken off the table.  

The DXY which tracks the relative strength of the dollar finished up at the highest levels since the early 2000s.  Interest rates on 10 year t notes jumped back up over 3%, although they did pull back from 3.15% earlier in the week.  This is some kind of balance between the Fed not buying t notes and investors getting back into them.  It's causing some volatility in mortgage rates too but nothing like we saw in 2020.

In 2020 people would say "what's a 30 year mortgage at right now"?  And my lender friends would say pull a number out of a hat, this is stupid, we're drinking.  Now its like within a pretty tight range around and above 5%.

Lumber.  Sumbitch still above $500.  Probably won't go much below $450 ever again.  Thanks a lot, Obama.

Yield curve between the 10 and 2 year t notes is inverted close to 40 bps.  That signals bad news down the pipe.  Every.  Single.  Time.

10 year and 3 month yields are 19 bps apart.  Think about that, you can let the government borrow money for 3 months at 2.84% or for 10 years at 3.03%.  Hmmmmmm?  How about neither.  I bonds at 9.62% and that is probably still losing money if you figure out the true inflation rate of 10% plus.

The market is weird as shit.  Prices seem to be dropping a bit but then when nice houses get price reductions its not uncommon to get into multiple offers all of a sudden.  The offers might all be below asking, might include closing costs but the buyers are still there.  It's all about pricing aggressively right now.

Median price month to date on 993 closed sales is still at 480k.  A few months ago I forecast we finish the year at 480k as our median price point.  Time will tell.

You guys I wanted to rant super hard today but Max said no, papa, don't do it.  So I'll have to wig out next week.  Enjoy your weekend.