Friday Update June 11, 2021

537 single family homes on the market today!  Granted it's Saturday morning as I missed my update yesterday but this is somewhat encouraging.  That means inventory levels are up more than 25% in 2 weeks.  

In the last 7 days alone we've had 493 new listings hit our local MLS, and over 887 deals close out.  It is nice to see inventory levels going up rather than down however do not look at this and think "phew, crisis averted".  These levels are still ridiculously low.

Month to date for June median sold price here locally.........$455,000.......new record.  A search of 3+ bedrooms, 2+ baths, 2 car garage in Colorado Springs eligible for VA financing priced at or below 455k yields 109 results.  Put that in the context of how many people PCS here alone and you see that we have an inventory problem driving prices.  At some point the prices may become so high that they begin to solve the inventory problem by pricing the majority of buyers out but my fear is that's when those units become expensive ass rentals instead of being sold.  

Remember all my rants about real estate being an inflation hedge?  It's like extremely true right now.  And if you're stuck renting you may want to dismiss all my negativity about how hard buying a house is right now and just do it anyway.  Yea it sucks, and yea you're probably gonna struggle a bit, but paying rent always sucks unless you're renting an Airbnb on vacation.

This week the Fed meets to talk about monetary policy.  Some people think they're going to ease off on asset purchases and there is talk of maybe even raising rates.  If they did either it would ultimately be a good thing for this market, but we will see in the next update what they came up with.

Some good news!  Lumber hit its peak May 7 at $1,700/thousand board feet.  Since then we've seen a steady plunge to a close of just over $1,000 on Friday.  Hopefully this trajectory continues and settles somewhere closer to the old normal range of $300-400 but realistically probably closer to a new range of $700-800.  I'm quoting the price of lumber futures and the reality on the ground right now does not yet reflect this trend.  In talking with the GM of a local lumber yard here this week he anticipates the out the door price of lumber to stabilize and perhaps drop by August/September.  This has to do with supply chain logistics and rising cost of shipping due to rising cost of diesel.  As they said back in the day "thanks a lot, Obama".  Really though thanks a lot, commodities traders.

Long story short guys is inflation is for real for real.  CNBC about a year ago was talking about how we should worry about DEFLATION.  I mocked that article relentlessly because it seemed like absurd and total horseshit.  Well now take a look at CNBC and see if you find any reference to deflation.   So stupid.  Position yourself in such a way that further and accelerated money printing works to your benefit, not your detriment.