Friday Update October 14, 2022

Yo this one gonna be a shawty ok?

Year to date:

Dow Jones is down 18.45%

Nasdaq is down 34.03%

SP500 is down 24.82%

Gold is down 8.82%

Bitcoin has changed its name to turdwallet

Real estate here locally in Colorado Springs started the year with a median price around $450,000 and today we're sitting on a median price of $460,000.  We are down about 10% off the peak but year to date are doing much better than most asset classes.

Now will this continue indefinetely?  I don't know with a strong side of I doubt it.  But guess what?  Investments are for the long haul, and apartments are for the short haul.  

Let's get into some statistics yo.

1691 single family existing homes on the market today.  About same as last week.

607 price reductions in last 7 days is just a sign of the pressure from the higher interest rates.  Similar to last week.

Today the yield on the US 10 year treasury bond broke and closed above 4%.  That makes it the highest yield since May of 2008.  I remember 2008 as being kind of an eventful year and there is every chance that 2022/2023 could be pretty eventful too.

USAA specifically on their website right now is advertising the following mortgage rates:

VA Purchase Loan InterestSee note16.250% APRSee note26.598% Points0.820
VA Jumbo Purchase Loan InterestSee note17.125% APRSee note27.535% Points1.321
Conventional Purchase Loan InterestSee note16.875% APRSee note27.084% Points1.000
Low Down Payment Purchase Loan* InterestSee note17.125% APRSee note28.019% Points1.125
If you don't know what points are don't feel dumb.  A point is 1% of the purchase price.  So to get the 6.875% conventional rate you would have to pay 1% of the home's purchase price just to get that rate.  It's not awesome.  But this is what buyers are faced with today.
Foreclosures.  Still not really a thing.  September of 2022 saw 51 properties foreclosed on in El Paso County.  The last 2 years of data is irrelevant but 2019, 2018, 2017 all had higher foreclosure figures for the month than 2022 did.  
So with the lack of foreclosure inventory and the general relatively low level of inventory we're still not seeing prices plummet.  I'm not saying it can't happen.  I'm not saying it will happen.  All I'm saying is if prices to go tumbling down it will probably be because the average buyer is unable to get financing.  And when that's the case, and you're the average buyer, there is no way to capitalize right?
One stat that is down significantly is sales volume.  Month to date this year we have a roughly 43% drop in sales volume against the same time last year.  So far in October we hit just shy of 400 sales and last year it was around 700.
Seller concessions are going up significantly as buyers try to use seller contributions to buy down their interest rates.  This is very noticeable and especially so with builders.  In some cases I've seen seller concessions on resales in the $15,000 to 20,000 range and know of one community of new builds right now offering $35,000 in concessions to buyers.  This is a remarkable change of pace and certainly a sign of weakness on the seller side.
Builders are now super duper nice to Realtors again.  That is a fun change of pace.  I see you Oakwood.  By the way for all of you familiar with Oakwood can you please tell them if a house has a 2nd story its not a fucking ranch.  Ok?  Thanks.
Long story short we're still rocking and rolling.  Slower and more tediously than we were before, but still rolling.  A lot more doubt in the market.  A lot less money in the market.  Basically no appraisal gaps in the market.  But semi decent activity is still taking place.  The disconnect right now is that when properties are priced aggressively they still get a ton of interest and multiple offers.  At the same time sellers that try to push for record highs end up sitting on the market indefinitely.  This is not the best time to sell anymore.  However it is also far from the worst time to sell.
What about buying?  It is kind of rough no doubt about it.  But how's renting?  That is my entire argument.
Next week I'll dive more into the shit show that is the bond market and specifically what is happening in the UK.  They're on the brink of disaster, yo, and that can be contagious to other markets.

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