Friday Update December 23, 2022

1187 is the number today folks.  That's the total number of active single family existing homes that are available for sale today in our MLS.  We hit a peak of around 1,700 active listings in late July as the market shift became obvious and rates were steadily shooting up.  I expect to see a rebound in inventory starting in January and accelerating towards June.  How much inventory we end up with will depend hugely on interest rates which are keeping a lot of people from both buying and also selling, because sellers then have to buy.

Month to date we have 573 units closed out at a median price of 448k.  Same time last year we had 1,137 closings at a median price of 450k.  One bit of positivity in this is that pricing has remained relatively resilient considering a 50% drop in sales.  Well it's positivity from an I own real estate stand point.  It's not all that great for affordability and I get that entirely.  Affordability has been and continues to be an issue for like as long as I've been an adult, but 2022 especially much.

On the macro front rates bounced back up a bit.  The yield on 10 year treasury notes is at 3.75% as I'm writing this, which is about 25 bps higher than a week ago.  This bounce came as a result of higher than expected GDP numbers coming out that showed the economy growing at a rate of 3.2%.  This to me is surprising and I'd like to say that numbers don't lie but there are people behind these numbers, people with agendas, and I'm not sure how much I trust them.  But on the surface it seems like at least officially we're not in a recession.

We do still have the correction of the yield curve to look forward to.  Today the 10 year and 2 year yields are inverted by 58 bps and the 10 year and 3 month yields are inverted by 59 bps.  Generally speaking these inversions signal recessions in the future, which to be fair there are always recessions and boom cycles in the future, but this signal means kind of soon.  I know I've been on this whole doom and gloom thing like for years now and that broken clocks are right twice a day.  Just the amount of debt in the system seems to me personally to be at unsustainable levels and usually when that happens we get a downturn, a deleveraging and then the beginning of a new economic cycle.  

I feel like we were on the verge of that in 2019 and then we had ourselves a world wide crisis that kicked the can down the road.  And now it seems like maybe the can isn't far from landing.  Which makes me wonder once it does do we deal with it and take the pain or do we kick it down the road again to deal with a nastier problem but later?

I'm guessing that for as long as we have politicians that work on 2 year election cycles, and as long as our government's primary mission is self survivial and electability that we will kick the can down the road as long and hard as possible.

For this reason I believe that for the long haul real estate will continue to remain a great investment as it is the only investment most normal people can make that every other normal person has a need for.  Like you could open up a grocery store, or you could make clothing, but to me of the food clothes and shelter categories shelter is the most appealing.

We have one more Friday update to go this year.  I'm gonna do my best to make that a year summary with lots of pictures, graphs, jokes, lots of use of the word fuck, but for now I gotta go tend to my meat.  We have like 40 pounds in the smoker and friends coming over to enjoy it.

I hope you all have a merry christmas and happy holidays in general.  I'll holler at you before the new year.

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