Friday Update September 3, 2021
Remarkably like Iowa flat levels of inventory for weeks now. 624 single family homes on the market today. Interest rates have been in a fairly tight range for weeks now as well. 1.32% today for the 10 year T notes. Stable inventory, stable rates, unstable prices.
This week the case schiller index came out with June's national housing report. They must have thought there was a mistake somewhere or that something broke because the increase in pricing was the biggest since the inception of the index in 1987. Get this, nationally a 19.1% spike in housing prices year over year. And in select areas like Phoenix it's close to 30%. Phoenix at 29.1%, Seattle over 25%, Boise in the mid 20% range and so on.
Here locally we closed out 1,618 sales in August for a median price of $445,000. That is down off our summer peak of $450,000 but as I mentioned before this type of seasonal fluctuation is expected. On the median we saw homes sell for 2% over list price, on average 4% over. In practice I'm still seeing multiple offers on basically every house. Year over year our MLS area saw a 17% increase in pricing.
I met an appraiser last week and we got to talking about the market. He asked me how much I thought the appreciation in this one particular area was. I asked like year over year, or monthly? He said monthly. I said 1%, he said 1.6%. Monthly. Then he asked me what I thought Widefield was appreciating at. I said man probably like 2% a month. The appraiser dude said 4%. A month. That's fucking crazy. My appraisal came in at value like most of mine do. Go to your appraisals, agents.
There is some super crazy stuff going on in the political arena. Our fearless leader Joseph Biden is spearheading a tax reform effort that is sure to backfire all over his rapidly fading reelection chances. Increasing capital gains tax to as high as 43% and even talking about making capital gains tax RETROACTIVE. That is so wildly ridiculous. Think about it like this. You do something that's legal because it's legal and socially accepted right? Not like the eviction moratorium but legal, you know? Then the government makes it illegal, and you get in trouble for what you did while it was legal because the law is retroactive. Like that's pretty dumb right?
This retroactive part of it seems unlikely to pass and is probably just being used as a high anchor for the negotiation shenanigans in congress. I intentionally don't capitalize congress and feel like it should be spelled con-gress. But still think about the implications of taking a 43% tax hit on the sale of your investment properties. How do you think investors reluctance to sell is going to affect inventory levels? What do you think that will do to pricing?
Never fear though as the government is here to help! The current administration announced this week that they will make and effort to "build or preserve 100,000 affordable homes". The proposed price tag on this is something like 213 Billion dollars or 2.1 million dollars per afforable home. I mean you can't make this shit up. For the record the US is short something like 5-7 million homes and other countries are in similar positions.
Canada's prime minister came up with the brilliant idea to make blind bidding on homes illegal and to potentially block investors from being able to buy real estate. Genius dude! Create an auction block where people can see the highest bid and allow their FOMO to drive pricing even higher. I swear the people that are in control of our countries are so far removed from normal people problems that they shouldn't even be allowed to talk about them.
Not sure how many of you guys watch the news but there is still like a virus out there and it goes by many names. It started our with the most amusing name of the Kung Flu, coined by none other than previous president dude, and now goes by the Mu Flu! Every scary mutation is another reason for the Fed to keep on with the QE infinity project. Chances are that 2 years into this mess the vast majority of the world has already been sick with it (and sick of it) but for the purposes of exploiting a crisis this crisis is not over yet. It hasn't worked ever but we're going to print our way out of this folks!
Have you ever had anyone pitch a MLM to you? Like a pyramid scheme? The one thing they all have in common is the concept of "critical mass". Usually there is a graph involved with a fairly flat but rising line and then the line goes parabolic. And you of course are about to get into this thing at the perfect time, right before this thing goes to the moon.
Well the beginning of Covid was that sweet moment, and then you can see the line shoot up. The crazy thing about this is you can't really put the genie back in the bottle here.
If you're waiting for prices to drop before you buy I think you might be sabotaging your financial livelihood.
Over and out, until next week.