1,364 existing single family homes on the market today, about 30 less than last month. Last year January to February saw a dip of about 115 units to 835. So year over year our inventory is up roughly 63%.
Yet prices remain resilient. Our 696 sales in January brought with them a median sold price of $482,250 with a 97% original list to sold price ratio. A year ago our list price to sold price ratio was the same and our median sold price was at $450,000. So one could argue that the market appreciated something like 6-7% but the trend is looking more like a double top at the moment. Sales volume wise this year’s January is a little better than last year’s, with last year’s being the worst since 2015.
We did have president dude the other day say “I talked about inflation, too, but you know how many times can you say that an apple has doubled in cost?”. If an inflationary fuck em all print baby print philosophy is where we are headed then there’s a good chance real estate valuations will pop through their previous highs of 2022. That will benefit the haves. Not so much the have nots. I do believe concentrating too much wealth in too few hands tends to end poorly for society and that is indeed the path we are and have been on.
Interest rates chilled out a bit and peeled back into the range they’ve been in for the roughly the last 18 months. Mortgage rates today are somewhere between 6.5%-7% for most borrowers, albeit more than half the mortgages originated over the last year and a half have rates significantly lower than this due to seller’s buying down the buyers’ rates. It seems that buyers are coming to terms with the relatively high mortgage payments while likely hoping for appreciation to take off some of the sting.
On the macro level so far things keep holding up. The unemployment rate is a terrible barometer of reality but its at 4%. Job number that rolled out this week were slightly disappointing but overall still positive. The delinquency rate on mortgages remains within historic norms, even maybe on the lower end of normal both here locally and nationally.
This little screen grab shows the 30-89 day lates on mortgages going back to 2008 and as you can see here still no real cause for alarm. However mortgages are generally the last loans that people allow to fall behind and everything else in life tends to fail first. I don’t have data for Q4 of 2024 yet but you can see the trend is that more people are defaulting on their loans year over year in every category. Think of this as part of the big picture. If a homeowner blows off their credit card, or their car loan they’re not just hurting their credit score. This means that people are falling behind on their bills due to a combination of a slower economy, higher cost of living, and higher interest expenses. So when you see an increase in credit card defaults think of that as homeowners that at the very least won’t be able to refinance due to rough credit. And since new credit is the equivalent of money creation the less new credit is issued, the less money flows through the economy, the more this whole thing reverberates the shit vibes.
Here you can see that US consumer sentiment hasn’t really recovered since the rona hit right through the mask. The 2022 bottom corresponds roughly to Russia’s invasion of Ukraine and the rebound since has been a bit short of enthusiastic when compared to the last 50 years below.
I’m going to keep this one short as the market really isn’t that much different from January. I’d argue to say that here locally homes that are priced aggressively and marketed well are selling without serious problems. Overpriced turds sit and turn white in the sun.
There do seem to be some headwinds for employment from a few directions. Tariffs, those don’t help. Unless you’ve waited your whole life for a job working in a ceramic tile factory or go to bed dreaming about making brake pads this nonsense isn’t going to help anything. If, big stupid fucking if, Trump’s tariffs do actually stick AND cause manufacturing jobs to return to America how much do you think those goods will cost here locally? If In and Out burger starts their burger flippers at $23/hour how much would you be willing to pay for all the things that are currently manufactured in countries where the cost of production is significantly cheaper?
Remember that companies outsource jobs from America not because they hate American jobs. The do it because they can make their widgets for less elsewhere and sell them competitively to Americans as Wal Mart rolls back the prices. If these tariffs become a thing expect to see a sharp increase in your cost of living coupled with reduced productivity. That is stagflation by definition and it’s super extra not great for asset prices like housing.
It’s kind of like your omelet got smaller and a lot more expensive. But with everything. Ya dig?