Friday Update September 24, 2021
621 single family homes on the market today. A lot like last week, super similar to the week before, almost identical to three weeks ago. Flizzzzzat inventory.
Demand is getting weird. I talked about buyer fatigue last week and that is for sure a thing. What is weird is the pockets of intense demand and pockets of soft demand. Like we have houses that are getting 8-10 offers in a day and we're seeing properties that sit for several weeks with no offers and then ultimately still sell over list price. Some are blatantly overpriced and go through several rounds of price reductions before selling.
I had this listing for example that I struggled to get under contract at list price after several days on the market. After going under at list price that deal fell apart and we went back on the market only to receive 5 offers and go under contract again for 25k more than the first time. Just weird.
A couple of builders are throwing out incentives and bonuses for the first time in years. Others don't have any land to build on. It's weird.
The Fed came out this week saying once again that they are going to taper on bond purchases "soon". Whether or not that actually happens remains to be seen but the market seems to think there is a chance. You see the Fed has been buying at minimum 120 Billion dollars worth of bonds every month. This has forced interest rates on those bonds lower. Now that the Fed is saying that there's a chance they will reduce those purchases interest rates on the 10 year treasury bond went up like 15 basis points since Wednesday.
This isn't unheard of, isn't shocking, isn't anything on it's own but it is something to monitor. The 10 year yield broke out of it's trading range that it's been in for the last several weeks and we will probably see interest rates on mortgages follow the trend up. Last few weeks it's been around 1.3%. Today we're at 1.46%. Obviously any intense hikes in mortgage rates will have an immediate and blunt impact on the housing market. Keep in mind that a crash in prices does not mean a surge in affordability unless of course you've been stashing your dollar dollar bills y'all.
So far in September we've seen about 1,100 closings here locally with a median sold price of $440,000. A year ago our median price was $385,000 and I remember thinking and writing about how crazy high that seemed.
I just got a renewal notice for my insurance policy for my Airbnb. It now includes an adjustment for inflation due to the intense spike in the cost of building materials. Let's just say the premium did not go down this year.
Kind of feels like we're heading for some 1970s style stagflation folks. This is where supply is relatively weak, demand is meh, and the central bank keeps printing money and driving prices up. Not a great economic situation that we find ourselves in at all. Keep in mind the people tasked with creating and maintaining our monetary policy have spent the pandemic lining their pockets through the ultimate forms of insider trading. Using tax payer backed debt/money to buy the very same securities as a central bank that the board members own as individuals. Classic corruption at the highest level of the shit pyramid. These people only care about themselves and their butt buddies so you can bet that any policy coming from them will not benefit regular people at all. These fuckwits are so far removed from normal human beings that they don't even have the capacity to consider us.
You know what is cool about owning real estate though? You get to ride the wave up without even trying. Ask me how.