GM and welcome to HomeSweet 🏠 - where homeowners get their news. We give you the tools, resources, insights, and memes to both build wealth and build a better life at home.
In today’s newsletter, we'll cover how to surf the rough waters, what the typical American thinks about the state of things, when to buy, and even some good news. Let's go!
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The Blueprint 🗺️
🗞️ Front Porch News: Chilly winter ahead. Fastest mortgage rate increases in decades. Where are Americans' heads at?
🛠️ Weekend Warrior: A handful of tips if you need to sell your home fast. Or if you just want to spruce things up a bit.
🧠 Shower Thought: Just tell me -- when is the right time to buy?
🧰 The Toolshed: Marketplace for luxury homes. Good news. Passive income ideas. Some investment alpha.
🤡 Meme Menu: Tehehhehehe...
Front Porch News 🗞️
Things still chilly out there (WSJ, CNBC). With another likely 75bps hike in November (and a +50bps hike in December) from the Fed, mortgage rates aren't relaxing anytime soon. The effects are numerous: fewer bidding wars despite supply being there; most would-be buyers getting priced out; US housing sales dropping for the eighth month in a row; existing home sales falling to a 10-year low; homebuilder sentiment drops to half of where it was six months back; single family home starts sit at lowest level in more than two years. It's real out there, gang -- as we've said. More broadly, 66% of American workers report feeling worse off financially compared to one year ago (*cough* inflation *cough*). And, 1 in 3 workers (including high-earners) run out of money before payday. Definitions schmefinitions: this is a housing downturn (dare we use the R-word?!).
Chloe Says: Look-y here: crashes in real estate move slow compared to other markets like equities and crypto, which react faster than, say, a person holding on for dear life to a property even if his ability to pay mortgage payments is disappearing. Do not be fooled by the slow speed... it's still happening. Too much evidence says so. When rates spike from 3% to 7% in the same year, a lag effect will take place.
Chloe Action: Stay sidelined. Accumulate dry powder (i.e., cash). We are VERY confident that the Fed will not tamp rates in 2022 and perhaps not even in Q1/Q2 of 2023. Stay with us and we'll be there every step of the way. Be a beacon of positivity and hang on :-)
What Americans are thinking and where they're moving (Talker). In a recent study conducted by OnePoll, 56% of Americans think that now is the time to buy a home. Of those surveyed, 74% were first-time buyers. As for reasons why, respondents claim inflation is making them more eager, homeownership as a path toward financial freedom, more room for growing families, and making a purchase before prices go even higher.
Chloe Says: Guys! No no no no no. This poll is a microcosm of where we are in this country with financial education. Well, we flunked the test. Inflation should make you less eager... homeownership does not alone lead to financial freedom... and if you wait a few quarters, you can pay less in both price and rates. C'mon, gang!
Chloe Action: Be very careful from whom you are taking financial advice. Many are still stuck listening to Dave Ramsey (who literally sold his home recently and yet is telling everyone to buy right now, tsk tsk). Be vigilant. Stay sharp. Don't buy the mainstream hype/scare tactics.
Weekend Warrior 🛠️
If you find yourself needing to sell your home somewhat quickly, here are some projects to consider that should help maximize value in a short period of time.
First impressions. Prune up the landscaping. Repaint the front door. Install a doorbell camera.
Declutter. Trash all your excess stuff. Remove items from your closet to make it feel roomier. Be choosy about which trinkets remain on tables, countertops, etc. Lots of random $h%$ everywhere if you're anything like us!
Exurban buyers. These are younger folks, who nowadays are more interested in turnkey homes, sustainability (think solar panels), open spaces for entertaining, private spaces for work/zooming. One thing they 100% did NOT have in NYC? A fire pit.
Shower Thought 🧠
Ok, but for real, when is the right time to buy?
Gun to our head? This is our answer... unemployment needs to get closer to 6.0-7.0% (3.5% right now); inflation needs to get closer to 4.0% (8.2% currently); IPO/PE/VC funding activity needs to have a few weak quarters (this indicates that even institutional capital is cautious, recognizing a recession and then tightening their purse strings accordingly). Roughly, that is it. No way are all those things happening this year. Whether it's Q1, Q2, Q3 of next year is anyone's guess at this point. More layoffs to come both before holidays and post holidays, which will impact homeowners who were praying to avoid the pink slip. Then and only then will a true repricing occur.
Reminder: by and large, demand drives price, not supply. People are scared right now for myriad reasons (see: auto delinquencies chart below, as an example; credit card debt is bad too; BNPL for groceries for crying out loud, etc.) and thus demand is low. In many cities, housing supply is not an issue and yet sales are down.
The Toolshed 🧰
The best resources we came across this past week that will help you become a better homeowner, ICYMI.
Pacaso is a marketplace for buying, owning, and selling a luxury second home.
Good Newspaper may be for you if you're sick of hearing how sh*tty everything is all the time, or if you think ignorance is bliss.
12 Ways to make passive income from real estate investing.
A little real estate investment alpha: locate geographies that did NOT see a big increase over the last two years that also have good schools and a solid jobs market.
Meme Menu 🤡
Thanks for coming through. See you next week!
Last thing before you go... what's Chloe?
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
