Friday Update November 4, 2022
What up! Besides your expenses I mean?
We have 1,643 single family existing homes for sale which is down slightly over the last couple weeks and the beginning of our winter dip in inventory. Honestly I thought our inventory levels would keep pushing higher but I guess the amount of potential sellers trapped in low rate mortgages really is suppressing listing activity. And also in turn buying activity.
October wrapped up with a median sold price of $455,000 on 969 total sales. The original list to sold price ratio was 96.53%.
For comparisson last year in October we had 1,514 closings at a median price of $436,000 with a sold to original price ratio of almost 101%. That percentage really shows the massive change in the market.
We've got agents at our office right now closing deals where between the initial price reduction and then additional seller concessions where buyers are getting discounts of 10-15% off list price. 8 months ago those same buyers would be getting beat out on offer after offer while trying to figure out who they can ask for appraisal gap cash.
Times have changed close to 180 degrees and all of a sudden working with buyers is fun again as we have a chance to negotiate. We as agents can finally patch up the knee holes in our pants from all the begging we've had to do over the last 2 years.
Fun and interesting times we're in for sure. Remember last year when lumber was at like $1,800/thousand board feet? Today it's $435. Copper is down significantly too and the majority of the supply chain issues have been resolved. This sounds like a really good thing.
And it is a really good thing except if you bought a new house in the last 18 months or so and now you want to sell it. You shouldn't buy real estate if you're gonna sell it in 18 months no matter how much agents like cashing those checks. You see now builders are able to get materials quicker, easier and cheaper. And as the interest rates and overall consumer sentiment crushes demand builders are now once again competing on price. Their costs have come down but the owner's cost basis hasn't. There were a couple local companies here that were pretty vocal about getting it while the getting was good so that they could then undercut the resellers in their own communities as the getting got less good. Yikes yo! A lot of folks are gonna be stuck or become landlords. And I'm guessing unfortunately quite a few folks are going to learn what notices of election and demand are.
I just closed on my own house this morning. I spent the last roughly 14 months building that thing. We went like 170k over our original budget because we created that budget in December of 2020. That thing Epsteined itself by like May of 2021 and past that point we did what we could to keep the build on track. We then finished the house right in time for mortgage rates to hit 7% where as they were below 3% when we started. Our appraisal came in 15% lower now than it did 6 months ago. The value of my new build will likely continue to drop before it starts to go up again. Shitty timing.
But not as shitty as renting. Because guess what, I built this house for the long haul. God willing I'm never going to sell the house but certainly I hope not to have to sell it in the short term. I don't care what it's worth and I don't really care to speculate what it will be worth in the short term. All I care about is that my wife, my 2 year old boy, and my 2 sweet dogs have a place to live that we control. I've seen so many stories from friends and people I know where their landlords sell their houses without giving much notice, or landlords that don't pay their mortgages while collecting the rent, or just landlords that are greedy and self centered pricks. You avoid all of that by owning your own home and having a long enough horizon, like as long as your 30 year mortgage, and it prevents you from stressing out about what your home is worth. Who gives a shit, just keep living in it.
I'm going to tell you one thing that really worries/bothers me. We do not have a free market in the US for anything serious. The prices of most assets are impacted by the debt market because the vast majority of major purchases are financed. And so the Fed by manipulating short and long term rates is able to manipulate the entirety of the stock, real estate, car, you name it market.
For the sake of simplicity and out of unfiltered hatred I'm going to compare the Fed to a raging alcoholic. In 2020 the Fed does a massive rail of cocaine and decides that in order to save the world they must drop rates to 0 immediately. This sparks a buying orgy of epic proportions. It goes on for 2 years causing bubbles in real estate, stocks, automobiles and just about everywhere else.
Then the blow wears off and these scumbags decide it's time to rip some shots. So they rip a shot and raise rates in the Spring, then rip another shot right behind it in early summer. Before the effect of the alcohol fully sets in the despicable cock suckers rip another shot, and then this week yet another. They say they want to take another shot immediately after this one, that's in December. But just like a raging alcoholic these fucking monkeys aren't allowing time for themselves to feel the effect set in. So next thing you know they've ripped so many shots so quickly that they're face down in a public urinal puking their guts out. Except instead of the Fed doing that it will be our economy that's dealing with the hangover for the next few years.
End the fucking Fed.