Friday Update June 10, 2022
This is going to be short and to the point because I'm going camping with my son for the first time. I'm extremely excited to get him together with some friends and their little ones. Hanging out with good people in the mountains is going to be infinitely better than trying to make sense of this fucked up market.
Today we have 1007 single family existing homes on the market. That's up by about 80 over last week and up about 250% in less than 2 months. If you want to overprice your house and hope for the best what's going to happen is you will get no showings. Like a normal market basically, except sellers are so used to the idea that everything gets multiple offers that it comes as a shock all of a sudden that it's just not true.
Rates went bonkers this morning on the CPI data release. Turns out, you won't believe this one, that inflation isn't transitory. Turns out the May data came out to an annualized 12% rate! That's third world inflation numbers.
This resulted in yields on the 10 year treasury pushing over 3.15% and correspondingly mortgage rates are now around 6%, higher if you have mediocre credit, lower with great credit and VA or FHA loans. Whatever it was yesterday, its like .5% more today. Aka 5% of a buyers' buying power went poof with this morning's CPI data. Maybe it will reverse next week, but not looking too great.
Next week the overlords meet and decide how much more they want to jack up rates and the American economy. I'll elaborate on that and the wage/cost spiral next week.
You guys gotta keep in mind that according to the leader of the free world and self proclaimed Brandon enthusiast, Joe Biden thinks that all this inflation is the result of greedy oil companies not pumpin enough oil. And also of course it's Russia's fault. Because when you're too fucking stupid to remember a complete sentence its easy to blame the Soviets, er the Commies, I mean Russians. Nevermind the fact that we blocked Keystone XL from happening. Nevermind the fact that American companies benefit like crazy from the elevated oil and gas prices because AMERICA IS ONE OF THE TOP OIL AND GAS PRODUCERS IN THE WORLD. No it's def Russia's fault and that's why we have inflation.
Meanwhile in the same breath this fucking idiot proceeds to tell a bunch of cameras, that were on and broadcasting to the world, that Americans are now saving more money, earning more money and just overall living better lives than before he rescued us all. Would be a cool thought if it was true. Americans have the lowest savings rate since 2008, highest credit card use on record now, and the modest increases in income are not even close to keeping up the inflation rate.
If you've been reading this blog a while you know I didn't spare Trump any blows, and Biden won't be spared either. I don't worship any of these people, they are nothing more than talking heads to me.
Meanwhile building entire subdivisions as single family rentals is one of the fastest growing business models in this country. Do you think that's a good thing? Certainly more housing is a good thing. But do you think having a handful of companies controlling tens of thousands of rentals could lead to any market manipulation? Do you think it's a healthy trend? I don't.
Bottom line is we're in for an interesting 2022. All the fundamentals remain the same. Renting forever is stupid. Not owning hard assets is a sure shot way to being broke. But damn are they making it difficult for the normal person to get ahead in this environment. I'm gonna go camping and drink beer by a fire and simmer down.