Friday Update May 28, 2021
I want a kitchen like that in the school bus I'm going to buy and live in when I say to hell with all this work shit.
407 single family existing homes, that's the number this week lads and lasses. That's like 15% less than last week and so it reverses our nice little 3 week long mini run up in inventory. Micro run up. It basically didn't happen.
Month to date 1174 total sales making our current inventory sufficient for 7 days and a couple hours. That's like really bad. Median sales price in May is over $437,000 here locally. This means that if you're shopping for a house sub $300,000 you will be surprised as to how shitty some of the homes are that sell for that much. It's pretty remarkable. Like hot hot garbage with foundation problems and needing total remodels often fetch multiple offers close to 300k.
Interest rates are holding pretty steady with 10 year treasury notes yields hovering around 1.6% for a hot minute now. That's not last summer low, but its stupid crazy low still. The low rate environment is certainly a huge factor in the surging prices and high demand. It's not the only thing driving it.
Humans are really funny mammals. They can see something that's directly in their face but many won't recognize it for what it is or believe it unless the news tells them it's true. So for the last roughly 3 or 4 years I've been talking about how inflation is going to be a real issue here with our dumb ass monetary policy and then I got ridiculed. Iggy, this is America, we are exempt from the consequences of making stupid choices. There won't be any inflation. And now every day the financial news talk about inflation being a serious concern, with the current rate significantly exceeding expectations. Of course if you have gone to the grocery store, the hardware store, a restaurant or heaven forbid you've tried to buy or rent a house you know exactly how real the inflation is. But more importantly now the news is talking about it, and so are every day people. The overly simple will blame everything on the rising cost of gasoline and in their logic will completely omit the fact that gas cost much more in 2008 yet everything else did not.
And so all this talk of inflation is encouraging people with money to park it into inflation hedges such as real estate.
Some good news in the system maybe? Maybe. Lumber futures peaked about 3 weeks ago at $1700/1000 board feet. That's over 500% higher than they were in March of 2020. Since then we seem to have a bit of a downward trend with pricing now sitting just below $1300. That however is still ridiculously high and on average is adding about $36,000 to the construction of the average home in Averageville, USA. There were trade talks last week working on NAFTA which discussed removing the 9% tariff on the American side but those didn't seem to yield any real result. I guess the fact that there are at least discussions and major pressure on the Biden administration from any and all lobbies tied to construction and real estate is good. And that is putting some pressure on speculators and driving prices down slightly. I sure would love to go to Home Depot and buy a 2 by 4 for less than 4 bucks at some point in my lifetime, especially because I ran a Bobcat partially through my neighbor's fence last night. Just the tip of it.
Long story short folks is that life is getting more expensive, real estate is getting more expensive faster than many other things with national price growth year over year at over 13%. This includes cities and towns where cousins marry each other and shake and bake meth manufacture is a regional powerhouse industry. Nicer areas saw growth closer to 20%. That's crazy.
The Fed remains committed to "full employment and price stability." Which is a banker's way of saying they're happy to keep printing money until we all drown in it. You guys make of it what you will but I'm gonna keep betting against the dollar. Oh by the way, digital dollars coming sooner than later!
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