Welcome to HomeSweet 🏠 - where homeowners get their news! We'll 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 comments from Zillow's ex-CEO, the Fed and rates, some spicy takes, what to expect from Q4/Q1, and some clowns at the end. Let's go!
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The Blueprint 🗺️
🗞️ Front Porch News: Zillow ex-CEO is not bullish. You can thank remote work for these prices, friends.
🛠️ Weekend Warrior: Hanging out.
🧠 Shower Thought: Consumer credit 'clouds' ahead. Don't post nudes on social.
🧰 The Toolshed: Renting out rooms, a whole home, or a garage. How to finance your Airbnb property.
🤡 Meme Menu: Mostly just jokes about 7% mortgage rates.
Front Porch News 🗞️
Zillow's co-founder calls housing market "worse than most people realize" (CNBC). Despite homes still selling fast, the "limited inventory" of for-sale homes (read: people who locked in low rates holding on) will keep prices elevated. So long as the Fed continues to hike rates to control inflation, the sad housing story will unfortunately get even sadder. More bearish (but important!) bits include: homebuilder sentiment fell three points in September (lowest since '14); 30-year fixed rate mortgage is now over 7%; and mortgage refinancing dropped to a 22-year low. OUCH!
Chloe Says: More blood to come, gang. Many have already called the current environment "2008 bad". This is simply what happens when the Fed needs to cool off an economy drunk on cheap money for over a decade. If it makes you feel any better, this is a bad time to own any asset, not just real estate. The clouds will pass though :)
Chloe Action: For the normies out there, like we've said, stay patient and vigilant as prices come down over Q4/Q1. For the higher-risk degenerates, one could look at (a) shorting this market and/or (b) UK real estate opportunities as the pound gets - sorry - pounded. Another option for the cash-rich: if one is looking to trade up for a newer/bigger home AND s/he does not need a mortgage at all, buy the dip in 100% cash. This does not apply to most of our readers, but our recommendations admittedly get a little wilder in this unique climate.
Remote work pushed up the home-price surge (BI). Yes, blame the Fed and the handouts and the outrageous fiscal spending, but don't leave out the here-to-stay work-from-home phenomenon. It is estimated that 60% of the home price increases were due to people wanting to either not give up their home (aka office) or people hungrily seeking out a home from which they could work. This behavior characterizes nearly all of 2020 and 2021. And with "hybrid work continuing to drive homebuyer migration, it will take a while for home prices to return back to earth."
Chloe Says: Given that this study came from the Fed itself, we are inclined to think that "60%" is a bit overblown (lol). Not falling for it, President Powell. However, the point stands: we're in a new world dealing with a difficult downturn ahead of us. Prices are first determined by the Fed that sets interest rates, which subsequently impacts mortgage rates and thus supply and demand. White collar workers want to sustain the home-office life throughout the 2020s and beyond? Ok, then that will be reflected in the home prices we see.
Chloe Action: If you do not have a job affected by work-from-home, then perhaps you don't need a bigger home and therefore can be less picky about buying that home. Otherwise, stick to our recommended Q4/Q1 game-plan. Everybody has their distinct priorities - forget what the media generalizes.
Weekend Warrior 🛠️
We got another inexpensive project you can knock out in a couple hours:
Hanging plants to max out the Zen energy in your home. The green guys will add oxygen to a room and all you need is a location that gets enough sunlight and a stud/beam in the ceiling. Use metal anchors, not plastic ones - unless you want your pots to free-fall and shatter into a thousand pieces. The basic instructions are found here.
Shower Thought 🧠
Ok, so we have two thoughts and we swear they're related :)
1) Q4 looks bleak for reasons everyone already kind of knows: record high energy prices, record high inflation, jammed supply chains, bleeding equity markets, tensions between Russia and the West, tech layoffs even from some of the best companies to ever exist (Google, Meta, etc)... What else though? Consumer credit. Some 60% of credit-card debtors have owed debt for at least one year (see chart below). Analysts are calling it "personal desperation". What's our takeaway? Too many Americans are overextended financially and the odds that none of these folks bought big-ticket items they cannot afford (homes, cars) is close to zero, in our opinion. Sprinkle in Q4/Q1 layoffs as companies reset their financials and you got one hell of a brew. Mind your finances during these times, folks.
2) When mortgage applications are reviewed, applicants' social media profiles are examined. The outcome of an examination will determine whether someone is approved or denied for the loan. Aside from opining that this is very dark and foreboding, no further comments. You were warned.
The Toolshed 🧰
Three things we found this week that will make your life better as a homeowner:
Here are the best ways to finance a short-term rental investment.
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.
