Friday Update October 1, 2021

620 single family homes on the market today.  That's like 3 full months of our inventory just riding flat.  Like I said before I expect inventory to start to drop into the holiday season together with demand.  Let's see if I'm right or just a stupid Realtor.

September sales here locally came in at 1594 total single family and patio homes.  So supply is something like 13 days worth.  Not enough and so we are still seeing a very competetive seller's market, just maybe not as hectic as in the Spring.  Prices seem to have reached a level of resistance and demand has dropped somewhat, but with supply being as short as it is the lower level of demand is just fine by this market.  Stuff is selling, and on the median its selling over list price.  Median price finished at $440,000 for the month.

Rates took a pretty steep jump earlier in the week to over 1.55% on the 10 year but fell back down below 1.5%.

Building materials man.  What can I say about that market that hasn't been said about Afghanistan.  Pretty well fucked.  Lumber futures rebounded after hurricane Ida and remain elevated, more hurricanes are not unlikely.  Ports of entry are backlogged with materials due to labor shortages.  Logistics systems are disrupted.  I've been waiting on foundation block to build my house for over 3 months, windows are 4 to 6 months out, doors are 5 to 6 months out, so on and so forth.  

For all of you geniuses that think that the housing market is gonna be "just like 2008 all over again"  I dare you to build me a fence for 2008 prices.  Show me how to build a house for $70/square foot and I will buy you tacos for the rest of your life.  Don't say something stupid like dig an earthship in eastern Colorado, I mean a house built in Colorado Springs city limits, to code, not out of tires.

 The inflation in building materials represents a roughly 20-25% cost increase year over year in construction, and this will continue as labor rates climb in that sector.  The shortages in building materials are not getting any better in the short term, and the prices are continuing to rise.

Economists and analysts can present all kinds of compelling reasons for inflation.   They can draw these super complex pictures and graphs of how x impacts y and their predictions for the future.  That's all good and great and fairly worthless.  One easy metric is how much money is in the system chasing the same or even smaller amount of goods and services.  The amount of goods and services has dropped thanks to whatever reason suits your political narrative, but the amount of money chasing them has increased.  The latest numbers from the Fed relating to M2 money stock show that August of 2021 featured 2.5 Trillion more dollars in circulation than August of 2020 .  Thats a roughly 12% increase in the amount of money chasing a declining amount of goods and services.  Really no other analysis needed, keep printing money, keep pushing prices on hard assets up.  

I think it is super important to keep in mind that the people who set our monetary policy are actual criminals.  If peasants like me did what they do I'd go to prison for market manipulation and insider trading.  But they go to Davos and rail cocaine off Ukrainian hookers.  Maybe that's the president dude's son I'm thinking of but whatever, same flock of shit humans.

Something that cracks me up is when people ask me if I feel safe traveling to other countries like Argentina or Greece or something.  Americans will say dude, those countries are corrupt and dangerous.  And I remind them that the only reason we don't think of the US as corrupt is because we legalized corruption and made an entire industry out of it called "lobbying".  In any other country its called "bribery" but here people go and get degrees to grease the wheels of our rotten government using corporate money.  And on the subject of dangerous I've never been to another country where getting shot at a grocery store is such a real possibility as it is here.  How is this rant related to housing?

The American financial system is based on issuing debt to pay for goods and services.  The amount of demand in the system is heavily impacted by the cost of borrowing.  This can be easily seen in the waves of new mortgage applications that ebb and flow in and out depending on whether rates jumped or sank and eighth of a point that week.

The richest people in this nation, a great example being previous president dude, control a shit ton of real property using debt that they have no intention of repaying.  The game is all about controlling as many hard assets as one can while using as little of their own money as possible.  When things start to go sideways and those debts become difficult to manage the criminals that control this financial system flip the script and devalue that debt by printing off a shit ton more money.  Sure it destroys the purchasing power of hard working people, but it helps the rich keep control of their assets so you know, fuck the poor people.

This is not a new concept.  It's not uniquely American.  And it is stupid predictable.  Knowing the game it's up to you whether you want to play or not.  It's not fair, it's not right, but it's what we're working with.  Own something.

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