Friday Update July 16, 2021
Well damn, we have plateaued. Last week we had 621 single family homes on the market and today we have 620. Rates are trending slightly downward and prices, you won't believe this, keep trending up.
Month to date we have 711 sales in our local MLS with the median price point right at $450,000 and houses at median selling 3% over list price. So not quite sure where all this market is crashing, sky is falling nonsense is coming from. Probably from an inability to pull comps.
Here comes some good news.
No big deal that's just the lumber bubble popping. For me and anyone out there that enjoys working with wood this is an incredibly welcome sight. Here is a bigger picture of just how incredibly ridiculous this lumber bubble really was.
Pretty dang ridiculous. Now we wait for the supply chain to clear and prices to drop in stores. That's going to be a very welcome change for builders and home owner DIYers alike.
However as I mentioned before lumber is just one part of the price matrix. It is highly doubtful that the cost of new builds will come down on this alone as the price of plastics, metals, appliances, labor and pretty much everything else going into building have gone up substantially. So good riddance to the lumber speculators, I hope some of you go bankrupt holding massive calls on $2000 lumber, and I hope anyone like you has to get a job framing houses or hanging drywall because that's what we need. We need hard working, skilled people. We don't need any more speculators.
Let's look at some macro stuff and truly nerd out together. We have agents freaking out talking about the market is slowing doooooooooown. How are we supposed to pay off that suit we financed for our next closing?? What about the beemer lease? We cannot be seen in peasant cars or no one will work with us, right? Check this graph out.
It is true that sales nationally are slowing down. However notice how they are slowing down to that trend line right around 5500? That's about 5.5 million homes being sold monthly, nationally. That's the level we were at before covid, and now we're resuming that trend line after sorting through the chaos that has been the last 16 months. I personally am extremely thankful for this "slowdown" because any further acceleration would have led to something bad personally, regionally and nationally.
Here is a graph showing how housing prices on a national scale are not crashing.
There is a lot of fear being played up in the media all of a sudden. I remember just a few months ago everything was hunky-dory with rising vaccinations, dropping Covid cases and a general sense of "America is back!". Now all of a sudden this delta variant is coming after all of us, cities like LA are reinstating mask mandates and we seem to be moving backwards in this pandemic progression. Say whatever you will about personal liberties versus social responsibilities. Wearing masks versus swapping spit with strangers you just met at a bar. Mark my words if we have another shutdown we will have another spike in "help" from the Fed, which will lead to another spike in asset valuations.
So yea in a nutshell the housing market is still very fast, very short of inventory, highly competitive and increasingly unattainable. One would think that once housing prices reach a level where the majority of people can't afford them, the market would slump. What this logic isn't taking into account is the amount of investor demand both individual and corporate. There are powerful interests in this country that would love nothing more than to make all of us their tenants. Fight the power man, own a piece of the pie and stand up for the little guy.