Friday Update September 17, 2021
614 single family homes on the market today. Slightly down over last week and overall just steady as she goes inventory wise.
We've got a bit of volatility in rates this week with the 10 year yield bouncing between 1.28% to about 1.38% today. The perception that the Fed is getting ready to taper asset purchases is putting some strength in the dollar which generally is a good thing for the American consumer. Next week we have the Fed meeting so it would be expected to see a good amount of volatility in stocks and the debt market between now and then. As far as real estate matters are concerned interest rates on mortgages remain suppressed around 3% or so, plus or minus half a point depending on a variety of factors like how much the lender likes you for example.
Good old lumber took a nice bounce up above $600/1000 board feet this morning as the mess left over from hurricane Ida is wrecking already wrecked supply chains in the south. This jump will hopefully be short lived as the hurricane damage is repaired and logistics adapted to the situation.
I keep seeing a lot of articles our there about "buyer fatigue". This is basically people getting fed up with the market and deciding not to buy. Honestly I completely feel that and have multiple clients feeling it too. However one fun fact about markets is that they don't care about our feelings. While the news makes it sound like buyer fatigue will be the thing that crashes the real estate market the reality on the ground is that for every tired buyer there are several motivated ones.
Yesterday I showed a house at the 800k price point, there were 4 other showings there in a 45 minute period. Sellers are expecting multiple offers by tomorrow and they will get them. Buyer fatigue is a thing but the impact it's having on demand is trivial.
Nationally we have a shortage of about 5.5 million single family homes. We were short something like 3.8 million in 2019, and now thanks to that thing that gets censored on Facebook and YouTube we are short almost 2 million more homes. From first hand experience in building my own house and in representing multiple buyers on new builds I can say with 100% confidence that building in this environment fucking blows. All the fun has been removed from it due to the inability to get materials in a timely manner or for a resonable price, or at all.
As I mentioned before due to the spike in housing prices over the last few years, and especially over the last 18 months we have a shortage of people making lateral moves. That's folks that want to move across town but don't have to. That is squeezing our inventory on the lead side.
Then we have a shortage of new builds being put up because builders are cautious not to overbuild and suffer losses and also because of all the supply chain issues related to construction materials. Another lead side inventory squeeze.
Then we have the corporate investors who are willing to buy houses at damn near any price as they are using OPM at super low rates and are doing their best to corner certain sections of the market. That's a tail end inventory squeeze as these investors are like a backstop to any other buyer fatigue.
So we have a shortage of building supplies, a shortage of people who are capable of building, a shortage of people willing to sell their homes to move to new ones and an abundance of demand. Tell me again how this market crashes under these circumastances.
The way that the market crashes is if the blue line on this graph goes vertical.
That's basically it. We don't have enough houses. We don't have enough people who are willing to work. We have too much cheap money in the system and too many people moving here. That's why so far in September we've seen almost 800 closings with a median sold to list price ration of almost 102%.
Next week we should have a fun rant about the wisdom of the Federal Reserve as they meet to talk about their stock picks, I mean ethical review, I mean global debt monopoly. Pieces of shit those people are. Control our financial lives they do.
Have a great weekend.