Housing and Stagflation 🏠🦌
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- čas přidán 26. 04. 2024
- GDP came in way less than financial market expectations. With sticky inflation and fears of rising inflation down the road, the fear of “stagflation” surfaced. What is that? What does it mean for housing?
Tune in and hear the details and breakdown from Steven Thomas with Reports On Housing.
👉🏼"Housing Debrief" - Season 5, Episode 13👈🏼
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*The content in this video is accurate as of the posting date. This is not investment advice.
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You talked about removing food, fuel, and shelter from the inflation number, and then: wow! Everything is okay! This commits the classic error economists make which is to look at their numbers and suggest
that everyone should just accept that everything is okay. But of course the boots on the ground reality of life is that prices are out of control, life is very hard to afford, and ultimately the economy will be led not by what economists assure us is the case, but by our direct experience is in actual life. So while it may be reassuring to bean counters that they can play a shell game with numbers, the reality out in the real world is so much different. This feels to me like an explanation for the waning trust in our institutions and “experts”. They are all saying one thing, but it does not align with the experienced reality. There is a disconnect.
I hear your point, and it is a great point. However, the FED does not have control over fuel and food. That is why the inflation prints release headline and core numbers. When OPEC decides to cut production, there is nothing that the Federal Reserve can do to curb its impact. Similarly, when the bird flu impacts egg prices, there is nothing that the Federal Reserve can do. Economists know that the shelter index is making its way down to normal levels (RENTS), which is why economists look at the inflation indices removing the shelter component. It tells us where inflation is headed.
Unfortunately, higher prices for everything across the board are here to stay. When experts refer to inflation coming down towards 3%, or the long-term arbitrary goal of 2%, it is still calling for prices to go up slightly. The big misconception that is out there is that the general public believes that once inflation is "fixed," prices will come down. That is deflation and is disastrous for the economy. In time, the general public will be able to absorb the higher prices as wages and salaries not only keep up with inflation but exceed it. And the U.S. consumer has been extremely resilient. Consumption has been robust, which has propped up the economy.
@@ReportsOnHousing Thanks for the reply. It seems like the economic forecasting and understanding of the US economy in specific is based on trends seen since WW2. I am curious if you are familiar with either Ray Dalio's work on "The Changing World Order" or the ideas in the book "The Fourth Turning"? How might those once in a century trends change or affect these models we are making predictions on? Specifically the world reserve currency status of the American dollar. It seems to me that a lot of our models are based on the assumption that will continue. It feels a lot like a house of cards that can't stand forever. Do you have any general thoughts on this?
@@marcusedvalson, I have argued that we are in uncharted waters. Economists and experts like to look backward and compare now to a specific time. I have heard post WW2, the 60s, the 70s, the 80s. In other words, this is the first time we have been here. I am VERY familiar with Ray Dalio and Neil Howe's work. They are just as wrong as the other economists and experts trying to peg now to the past. We are charting a new course. We have not been here before because of the added significant variables of the Internet, smartphones, AI, and the shrinking globe.
I much prefer looking at the trendlines and reporting on what they are telling us, rather than projecting a narrative based on the past.
@@ReportsOnHousing I think it would be foolish try to peg now to an exact time in the past. But to my understanding the whole study of economics is about examining how the mechanisms of economies work; which is why we can build models and theories of business cycles, etc. It would be impossible to study the machine of economics without looking at how it has run in the past. All machines run by repetition of a cycle, some long, some short. I of course don’t know what will happen, but when I see the breakdown of models (as has been noted on your channel), it sounds an awful lot like what ray talks about in the later stages of a world power’s bell curve. Things stop making sense in terms of models, and it is just watching what is happening right now; which is what it sounds like you do. It is a wild time to be alive, but I appreciate content like yours trying to make sense of it all.
@@marcusedvalson, very well said. It’s trying to figure out a path based on all the variables. We listen to everybody’s view, regardless of how contrarian it appears, analyze it, and then utilize what we can for our model and for what makes sense. These times are fascinating. COVID was an enormous disrupter that affected just about every chart. It will be interesting to watch how it all plays out.
Aquadots totally sound like a kids show 😂
Right?!?
Hello. Are you noticing a softening in sales, price increases, and market timing given the interest rate? Anecdotally it seems the 7%+ interest rates have caused a noticeable softening.
In So Cal we have been back to Multiple offers all over in all markets except for Ultra Luxury but the affordable homes are all multiple offers over ask...Now the last 2 weeks we have nearly gone up a full percent!!! So we will be watching to see how it's affecting offers the next few weeks. But demand is huge it's kind of unbelievable. What market are you in?
@@teresatims, in San Bernardino County, the housing market is not as hot as last year. The hottest range is $300k to $500k at an Expected Market Time of 60 days. It was at 41 days last year, and 31 days in April 2022. Of course the higher the price range, the slower the market. There are many homes that are listed and they fly off the market, the ones in excellent condition that do what it takes to secure a much faster sale. But there are plenty of homes in every price range that are lingering on the market. Home value are appreciating in the Spring Market at a pace of about 1% per month, but if rates do not go below 7% soon, as the year progresses there will be more pressure on prices as the inventory continues to rise and demand remains flat.
@@ReportsOnHousingthank you!
What about Orange County in particular?
Anecdotally I see prices of homes that aren’t catches getting slight price reductions.
There are always price reductions that stem from unrealistic expectations and improper pricing.