Arizona real estate weekly update 7.25.22

Call me crazy…But I believe affordability is the primary driver of housing prices. Mortgage rates determine payment. And payment determines affordability. This is rough rough rough math. But based on the inverse correlation between rates and housing prices you could easily derive from this chart a 30% drop in prices everything else being equal.

Buyers are still slashing prices as indicated in ‘Number of Price Changes per Week’. As long as this stays high or continues to grow there will be tremendous pressure continuing to push prices lower. Just because of psychological reasons if not anything else.

Based on the ‘average list price per square foot’ if you bought in the last year you are more than likely upside down. And technically you’re probably upside down if you bought anywhere near the end of 2020. Assuming a 6% reduction in your appreciation for selling fees.

Supply now sits at 2.8 months. This typically peaks in Jan-Feb. So I think it will continue to climb. I wouldn’t be surprised if we’re back to supplies being where they were in 2015 before it peaks, Jan/Feb ’23.

Arizona real estate weekly update 7.18.22

Price cuts continue to accelerate. Sellers are panicking. Typical at the top of a bull run. This is not good for housing prices.

Inventory and months of supply are back to Jun 2019 levels.

Albeit minimal the price per square foot is now lower than where it was a year ago meaning the one year ROI on a house is negative for the first time since… Um, well, I don’t know. None of the data shows house prices to have ever declined in the last 4 years. This is major sign the market has turned.

Despite the ‘low prices’ the listings under contract are the lowest they’ve been in 3 years. Also, a sign that buyers are telling sellers to keep their houses.

Don’t buy yet. But have your gunpowder ready. There will be deals soon. Don’t try to catch a falling knife.

I Bonds don’t yield 9.62% – It’s actually 10.49%

The publicly advertised rate for I Bonds according to the Treasury Direct website is 9.62% if they were or are purchased between May and October of 2022.

But what people do not realize is that an I Bond issue month is the same regardless if you purchase it on the first day of the month or the last day of the month. So consider this, if you purchase an I Bond on July 31st of 2022 or in 18 days. Then on August 1st it is already 1 month matured.

So let’s do some basic math. If the current yield is 9.62% then you can divide this by 11. Given that you’re yielding 9.62% in 11 months, not 12. Or technically 11 months and 1 day. This will give you a monthly yield of .8745%. Multiply this by 12 and your annual yield is actually 10.49%

Arizona real estate weekly update 7.7.2022

My Cromford access has been restored. I can now bore you with housing statistics.

The Fed will burn down everything until they get inflation under control, no asset is safe.

From WSJ:

The overall tone of the minutes suggests “the Fed upgraded the inflation problem to a five-alarm fire,” said Omair Sharif, an economist and head of the advisory firm Inflation Insights LLC.

As a result, the minutes also revealed officials’ growing acceptance that fighting inflation might lead to higher risks of a recession, but they saw that as “a cost they’re willing to pay,” said Michael Feroli, chief U.S. economist at JPMorgan Chase.