OT: Housing market
Not sure how many MGoMembers are currently buying or selling but...holy cow. Apparently inventory is down over 50% from last year and it's insanely competitive. What's your experience like right now? Anyone thinking of just selling and renting for a little while and figuring things out later?
On a related note, I'm wondering how the heck builders are dealing with these lumber costs if they have fixed price contracts. Eesh. Lumber futures are going bananas. Seems like a catch 22 - we need more new builds and new inventory but the lumber prices are so high it seems like it'd be hard to get some of the homes to appraise.
Last June we sold our house in Jacksonville, FL. Originally asked $225K, had an offer in two days for $210k and accepted it. A few days later the buyers backed out. Back on the market and a few days later we accepted an offer at full price.
Built a new house about 30 minutes outside Charlotte, NC via Ryan Homes for about $285K (signed the agreement Feb. 2020). Same model house today in our neighborhood is starting at $370K. I *think* these might include a basement (oh, how I miss those!), not sure...but regardless the price has gone up either way. I'm glad we built when we did, not to mention the 2.8% interest rate we got. Will prob never get a rate that good again in my life.
My co-worker spent the past six months trying to find a condo in the Charlotte area and every time she sees something in the morning and wants to go look at it, by the time she gets off work it's already sold. Many of these offers are full cash, sight unseen. It's insane!
Also insane: when you see the price of a 2x4x8 at Lowe's went from $2 to $6 per board.
To me, the financial markets -- real estate, stocks, bonds, all of it -- seem insane by historical metrics (such as CAPE).
I keep thinking that there must be some crash coming that will re-impose valuations in line with historical metrics.
But I also think that any crash would be followed by however much money printing is needed to erase it, even if it takes $100 trillion in stimmies. Like 2008 or 2020, but x2 or x10.
Some folks feel that there will be a massive deflationary crash, and that the government will not be able to fill it up with printing, since there are about $1 quadrillion in derivatives. This is the realm of folks like Harry Dent.
Some folks feel that there will be hyperinflation because of the gargantuan money printing by the US (plus $14 trillion in M1, a 350% increase in M1, in the past 12 months). And that there is so much debt that the government can't let interest rates rise, so keep printing. This is the realm of folks like Peter Schiff.
Then there's "This Time Is Different: Eight Centuries of Financial Folly ", by Reinhart and Rogoff, which points out that, once debt gets large enough, it usually leads to reset by a depressionary default or by huge inflation.
Officially quoted inflation isn't huge, and folks point to velocity of money declining as money is printed. But the official inflation in my opinion is becoming a worthless fudged statistic (hedonics, subtracting expensive things that are major costs for most people, etc.). If you look at Shadow Stats or just what things cost at the supermarket or at Home Depot or try to get a graphics card, or the cost of Big Macs over time, you know that inflation is big and getting bigger.
So, while I think a crash or giant inflation is coming, it's hard to tell which or when. It's hard because they are opposite things, and preparing for them are opposite actions. Hardest ever in my investing life, and I worked professionally in investing for a chunk of my career and have experienced some tumultuous times. Worst would be stagflation with no winning strategies. Interesting times.