Hurricanes Lounge, XXXIII: Danger Zone

[MinJaBen]

A while back we were discussing the housing market and implications when Apple arrives. This weekend, my buddy who's a realtor said he's never seen anything like it is right now. Many builders are now selling based on bids and inventory on MLS is at such a low. For reference, he said MLS inventory is around 2000 right now, vs. 6000 a year ago, vs. normally ~8000. Back when the bubble burst in 2008, there was 19,000 inventory.

I moved into my neighborhood a year ago and prices are now ~$125K more for the same home, IF you can win the bid (one person told me their friend bid $20,000 over asking on a lot/home and were outbid by $20,000). I read on WRAL this morning that some builders aren't entering into sales agreements until the house is finished due to rising costs of materials, some have stopped taking on sales, and some are using a lottery for buyers. Just nuts.

While this is great for h0meowners who already own their home, it's going to be a struggle for new buyers as well as renters as that's going to skyrocket as well. I'm not an economist (nor do I play one on TV), but I would have to think inflation is a very real concern right now. I know that's been said in the past 20 years often, and never really happened to the level people expected, but seems to me the stars are lining up on this, but I'd like to hear from someone who knows more about it.

I'm not an economist either. I have seen several reports that the labor market everywhere is very tight right now coming out of the pandemic. A lot of people have dropped out of the labor force and a lot of businesses, especially in the retail/service industries, are having a very hard time getting people to come back to work at this point. It wouldn't surprise me to that result in an upward pressure on wages on the low end, which will likely mean an upward pressure on the prices.

The fact that interest rates are already nearly zero means the Fed won't have much ability to fight any inflation that occurs.

 

[Socks]

View attachment 434471

This is Smaug. Smaug is a very old dragon from the Hobbit. He literally has a mountain full of gold. So much gold that he literally sleeps buried under piles of it.

Forbes ranks Smaug as the second wealthiest fictional character. At one point, he was first, but the price of gold has dropped. It's estimated that his fortune amounts to about $51.4 billion.

Which also means that Smaug would rank 15th on a list of wealthiest Americans. Yes, that means 14 Americans have more wealth than an ancient dragon with a literal mountain horde full of gold.

Sooo... who was number one? Scrooge McDuck I'm guessing? Not that it would matter. Dude would be braindead from taking so many headers into piles and piles of solid gold.

 

[Blueline Bomber]

Sooo... who was number one? Scrooge McDuck I'm guessing? Not that it would matter. Dude would be braindead from taking so many headers into piles and piles of solid gold.

From the list I saw, it was McDuck at 65.something billion. I think the only one that could have contended was Santa Claus, whose value was "infinite", but Forbes didn't feel comfortable listing him as fictional because they didn't want to kill Christmas for young children.

 

[Socks]

From the list I saw, it was McDuck at 65.something billion. I think the only one that could have contended was Santa Claus, whose value was "infinite", but Forbes didn't feel comfortable listing him as fictional because they didn't want to kill Christmas for young children.

I legit have never given any thought to Santa's "wealth" but yeah he'd have to be loaded wouldn't he?

 

[Boom Boom Apathy]

I'm not an economist either. I have seen several reports that the labor market everywhere is very tight right now coming out of the pandemic. A lot of people have dropped out of the labor force and a lot of businesses, especially in the retail/service industries, are having a very hard time getting people to come back to work at this point. It wouldn't surprise me to that result in an upward pressure on wages on the low end, which will likely mean an upward pressure on the prices.

The fact that interest rates are already nearly zero means the Fed won't have much ability to fight any inflation that occurs.

Yep, prices are already going up on a lot of things. I do a lot of woodworking and building projects. 1.5 years ago, I completely re-did our walk-in closet with all new custom cabinets at our old house. The cabinet grade plywood I used to build the cases cost ~$27 per sheet (4x8). Today, that same plywood is $60 / sheet. I was paying ~$2.95 / board foot for the maple for the frames, it is now $4.30. 2x4's (8ft) were $3-$4 and are now $8.

I realize part of that is due to supply shortages, but the cost of building anything is 1.5-2X what it was just over a year ago.

 

[RodTheBawd]

I do a lot of woodworking.

So does your hotw..... too easy.

 

[Boom Boom Apathy]

So does your hotw..... too easy.

Welcome back. If all I need to do is leave a curveball hanging like that to get you back, I'll take it.

Hope all has been well with you.

 

[MinJaBen]

So does your hotw..... too easy.

Nailed it.

 

[Boom Boom Apathy]

Nailed it.

Screw that.

 

[RodTheBawd]

Welcome back. If all I need to do is leave a curveball hanging like that to get you back, I'll take it.

Hope all has been well with you.

I just couldn't believe my eyes - 2nd thread I looked at and saw you were the most recent reply; it was meant to be.

Thank you sir. It's weird, you'd think with having to work remote and being a hermit my activity here would have picked up. I guess I have other things to occupy my time while at home and working vs. in the office (your hotwife not withstanding ).

 

[Boom Boom Apathy]

I just couldn't believe my eyes - 2nd thread I looked at and saw you were the most recent reply.

Thank you sir. It's weird, you'd think with having to work remote and being a hermit my activity here would have picked up. I guess I have other things to occupy my time while at home and working vs. in the office (your hotwife not withstanding ).

Glad everything is ok and glad you are back.

 

[MinJaBen]

Screw that.

What you did there, I saw it.

 

[The Stranger]

The fact that interest rates are already nearly zero means the Fed won't have much ability to fight any inflation that occurs.

The Fed could theoretically counter inflation by raising interest rates...raising the interest rate will help lower inflation.

But the Fed is boxed in because our economy is now reliant on stimulus, cheap money, and artificially low interest rates. Raise the rates to counter inflation and reveal the weak economy.

For the time being, the messaging from Jerome Powell is that this increase in inflation is transitory and they aren't even thinking about thinking about raising rates. They are trying to keep a brave face.

 

[emptyNedder]

But the Fed is boxed in because our economy is now reliant on stimulus, cheap money, and artificially low interest rates. Raise the rates to counter inflation and reveal the weak economy.

The economy does seem to be in a really weird place. Additionally, it looks like there is a bubble in the crypto currency market. Much like the classic case of tulips, there is something that has as much value as people place on it and people have been multiplying the value quite dramatically. With the extended period of almost non-existent inflation, there is either a new economic reality in the 21st century or all hell could be breaking loose in the future.

 

[hblueridgegal]

A while back we were discussing the housing market and implications when Apple arrives. This weekend, my buddy who's a realtor said he's never seen anything like it is right now. Many builders are now selling based on bids and inventory on MLS is at such a low. For reference, he said MLS inventory is around 2000 right now, vs. 6000 a year ago, vs. normally ~8000. Back when the bubble burst in 2008, there was 19,000 inventory.

A family friend, who is a realtor, is considering a career change because there's so little inventory. She's had a steady business in the mid-range market for years and it's pretty much dried up as folks are staying put.

 

[Anton Dubinchuk]

We are actively househunting for our first house.

We are on our 6th offer, all above asking. The last house we offered on was a tiny 3 bed 2.5 bath ranch - total old lady home. We were 1 of 46 offers per the listing agent. Odds are of course not good in a situation like that...

We've looked at houses every weekend for a month and a half with an 8-month-old in tow. We are not being picky - we are seeing 7-8 houses per weekend across a pretty decent range of prices. Our current offer is between us and 11 others - $20k above asking but we're not holding our breath. We've saved a bit so we have some breathing room to make up the difference between the offer and the assessment value, but often sellers are going straight to cash offers and ignoring first time homebuyers to ensure they receive the full amount of the offer. In fact we had a home where we were the highest bidder, but they went with a lower cash offer instead - the listing agent said it wouldn't have mattered how much higher we went, it was about the security a cash offer provides.

We thought we had an agreement on a place we really liked because we were willing to go along with some unique contingencies which involved closing at the end of May but giving them 2 months occupancy until July. We agreed to all their terms - then some personal stuff came up on their end and they freaked out on their agent and pulled it off the market. We were one signature away...

Every Friday things get listed, every Monday offers are due. Like clockwork. We had a 4-month head start on the end of our current rental agreement, but at this point it's looking more and more like we will have to re-up and rent for another year and try again in 2022.

Fewer more frustrating experiences in my life. Just want to buy my family a house and it's like playing the lottery to even compete.

 

[Roboturner913]

House hunting here too. It's hella frustrating. Made an offer 10K over asking price yesterday and somebody else went 20K over. Houses are being bought sight unseen by investors out of state who just want to flip them.

We bought our house for just under $100K seven years ago and our realtor is telling us we can get $140K for it, and it won't last a day on the market.

I can't imagine this is sustainable long term and there will be a lot of people who can't get out before the bubble bursts, and things are going to get bad. Maybe worse than 2008.

 

[Anton Dubinchuk]

House hunting here too. It's hella frustrating. Made an offer 10K over asking price yesterday and somebody else went 20K over. Houses are being bought sight unseen by investors out of state who just want to flip them.

We bought our house for just under $100K seven years ago and our realtor is telling us we can get $140K for it, and it won't last a day on the market.

Our realtor is a family friend (mother of our brother-in-law) and has been taking amazing care of us. 30+ year veteran in the industry, she said she's literally never seen anything like this. Listed a house last week and had 6 offers above asking within 15 minutes.

I've also seen prevailing opinions that it's not really a "bubble", more a natural effect of the supply issues. Not an expert so in some ways parroting what I've read/heard, but it at least makes sense on the surface to me that as the supply chain slowly returns to normal, so will the housing market (instead of "bursting"). Doesn't seem like artificial inflation - there's actually fewer houses on the market than people looking to buy.

 

[LostInaLostWorld]

Live inside beltline off Ridge Rd. Have been getting unsolicited postcards, mailbox hangers, etc. from those who want to purchase my house since the 90s. Neighbors as well. Over the last 3-4 years the volume has dramatically increased. The rare times there are for sale signs they almost always involve a realtor. I am like why bother with a realtor? By owner and let the buyers outbid each other. Especially the older houses which will be torn down, lots divided in two and $1M+ houses built (like mine will be when I am dead and gone).

 

[Roboturner913]

Sucks for people who are just looking for a place to live.

 

[Boom Boom Apathy]

Good luck @Anton Dubinchuk I don't envy you.

 

[Nikishin Go Boom]

its wild in ATL too. House next door that has an extra bedroom sold for 90k more than what I refinanced my place for 4 months ago. His realtor set a high price and said it wouldnt last long. He still got 15k over asking. he could have waited for more but didnt.

pretty crazy

 

[Anton Dubinchuk]

its wild in ATL too. House next door that has an extra bedroom sold for 90k more than what I refinanced my place for 4 months ago. His realtor set a high price and said it wouldnt last long. He still got 15k over asking. he could have waited for more but didnt.

pretty crazy

(I am in ATL too, FYI. Looking to get out of the perimeter and into the Roswell/Alpharetta/Cumming area.)

 

[Nikishin Go Boom]

(I am in ATL too, FYI. Looking to get out of the perimeter and into the Roswell/Alpharetta/Cumming area.)

right we have talked about it. Forsyth has great schools. i tried to convince my wife to go up there 2 years ago but 'we' have too many friends here

 

[Lempo]

Apple gunna be getting some obedient work force.