Friday Update October 29, 2021
Alright it's looking a bit more like a trend of inventory dropping but let's see about next week and make sure it isn't just halloween. We have 569 single family homes on the market today, a roughly 7% drop from last week.
This is kind of what I was expecting going into winter. Median price point on the October solds, of which there are over 1500, is at $428,000. Prices are softening up a tiny bit in this slower autumn market.
That being said slower means vs the insanity that was this Spring. If it got any busier than Spring was I'm pretty sure I could sell Realtors one way tickets off the Golden Gate bridge. It was too busy. Very unhealthy levels of busy.
We're about 45k higher on the median price than we were this time last year. This means that the folks that bought a house last year are paying roughly 200-250 bucks a month less than the folks that bought that same house today. It's pretty obvious that people are feeling the price crunch and until we see wages bump up we will probably see a bit of stagflation in the market. As in prices flatten rather than keep climbing at double digit rates.
Wages bumping up. Yesterday I went and got take out from one of my favorite Chinese joints. They've been around since before I've been around and for the first time that I can remember they're now having to close one day a week. Tuesday. Because they can't find staff. I'm sure the fact is they can't afford to pay enough to entice people to work there which leaves them with some choices. Close for longer hours and run with reduced staff overhead, and less sales. Raise prices across the menu and offer to pay higher wages. Or the owners break their backs working even longer hours. Option 2 seems most sustainable but will bring the most bitching.
True story the economic "recovery" is stalling out. Q3 GDP growth came in at 2% which is less than the rate of inflation. There has been no real growth. Probably the opposite is happening.
GDP is the measure of all the transactions in an economy as valued in the local currency, say dollars. So if you want to manipulate numbers for your own benefit you could, for example, create a mountain of new money to be spent to prop up the GDP numbers. We have the highest inflation in 40 years driving up the GDP numbers while the real number of transactions is dropping.
Our total GDP in the US right now is like 23.1 Trillion, before the pandemic hit it was about 21.7 Trillion. Before the pandemic we had about 15.4 Trillion in M2 money, today we have 21 Trillion. So GDP increased overall by 6.4% and the money supply by about 36%. That my friends is a shrinking economy. Anyone telling you different is one of two things, a liar or a moron, and pretty likely both.
And just go to any store and try to shop like you normally would. I'm not saying it's tragic out there where you can't find anything, but a lot of goods are hard if not impossible to find. We have shortages of everything from magnesium to turkeys, from truck drivers to tile setters. We DO NOT have a shortage of thirsty real estate agents.
Today the dollar index (DXY) took a pretty sizeable jump up meaning that the relative strength of the dollar against a few other currencies improved. This is on the back of a report that US consumer spending came in higher than expected. This is being sold as good news portraying a strong consumer when in reality it's pretty fucking difficult to spend less money in an inflationary period even if you tried. Good old economomics reports, manipulate them however you want to.
Interest rates dropped on the 10 year notes from 1.65% last week to 1.55% this week. Good news for anyone that needs to borrow money. Lumber finished lower on the week closing below $600/1000 board feet. A very welcome development as I'm finally buying lumber to build my house with.
So on this 92nd anniversary of Black Tuesday which kicked off the Great Depression I just want to leave you with one final thought. If you lived in a feudal society would you rather be a lord or a serf? The cool thing is you have a choice.