Yeah, money is pouring into real estate around the country. Classic inflation hedge move. It is also producing a classic real estate bubble, and like all bubbles it will burst sooner or later. The Puppetmasters’ Administration is filled with economic illiterates who don’t have a clue about an economy that they are handling with the finesse of a chimp at the wheel of a Dodge Durango going at 120 mph. When this all tanks their solution will be more regulation because that is always their solution. Pass the popcorn.
Bubble, Bubble, Toil and Trouble
- Donald R. McClarey
Donald R. McClarey
Cradle Catholic. Active in the pro-life movement since 1973. Father of three, one in Heaven, and happily married for 43 years. Small town lawyer and amateur historian. Former president of the board of directors of the local crisis pregnancy center for a decade.
I apologize in advance. I spent about 40 years working in accounting, banking, real estate lending/appraisals.
4 Oct Barron’s: Case-Shiller Home Price Index Up 19.7% Year on Year July 2021 – a record rise since the 1987 inception. .
The average price of US farmland is a record $4,400/acre.
Also, huge bubbles in stocks and automobile prices.
Well, Who’d a thunk?
Uncle Sam handed out to the American people and businesses more [in real dollars] than it spent to defeat Nazi Germany and Imperial Japan in the 1940’s . . .
Seen on the world wide web. They can print dollars. They can’t print automobiles, houses, land, . . .
We could sell our (paid off) home for the ransom of Richard the Lionheart.
But we’d have a much harder time finding an affordable replacement. The market is barking mad right now. And don’t get me started on trying to find a decent used car–those are snapped up even faster than the houses.
The Administration and the Democrats in Congress are barking mad about fiscal policy. However, we’re having trouble with inflation because the Fed’s not doing what it should to control the growth in monetary aggregates.
Crazy times.
Inflated appraisals.
I just closed on a fixed 20 year mortgage saving us 3 points.
The appraisal was 70k over our perceived estimation of value.
Near zero inventories has made sellers some nice profits…but then what? As Dale pointed out. You gotta find a suitable replacement.
btw….I stopped into Kohl’s to buy a fresh dress shirt, white. Unreal.
Because I don’t shop, I was flabbergasted at the lack of clothing inventory.
Biden19
What a horrible bug.
One of the problems with houses is massive real estate holding firms (e.g., BlackRock) and pension funds snapping up single-family residential homes and flipping them into rentals. You can’t outbid a $9 trillion dollar (yes, trillion) “shadow bank” or pension fund with multi-billions to hand.
https://mobile.twitter.com/APhilosophae/status/1402434266970140676
https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801
Oh, don’t get me started on inventories.
A month ago I stopped into a Walmart in a well-heeled part of Macomb County, Michigan with my youngest to get some milk.
Not a gallon in the store.
I found some half-gallons at an endcap and snapped them up.
Even at our local Costco, while there aren’t any obvious holes, the stacks are shorter and there’s very little behind the first pallet.
Very interesting times, to be sure. But I’m glad you got a decent re-fi, Philip.
Housing market sure is crazy right now in MA. People who are buying now will/might soon be underwater.
This house in is Melrose.
https://boston.cbslocal.com/2021/09/27/burned-out-home-for-sale-fire-melrose-massachusetts-20-berkeley-street/
Can’t imagine someone would actually be interested.
Thanks Dale.
I didn’t take the bait as they, lenders, wish for you to do. Equity.
Just kept it geared at reducing interest and if you saw what I drive you would laugh. 210,000 mile Chevrolet Avalanche from 2003. 4×4.
Farm truck.
It’s insane at the cost of used iron right now…so we hunker down and ride out the storm to come. Good runner btw.
🤓