Things okay in Eaton Rapids, Joe?
-irontomflint from the comments
I cannot tell you. Not because I am tight-lipped or because I am a jerk. It is because I don't know.
It is grand to have Southern Belle and family back from Miami. 1400 miles is a long ways away.
SB starts her new job tomorrow and expects her first paycheck at the end of August. That will give them a lot of financial ease.
---Note: This post was temporarily unposted due to hear-say nature of what follows. I am REPOSTING primarily because of the quality of the comments. Also because I am adding this note regarding the anecdotal nature of the 'data'---
The "asking prices" of property is irrational. Property that was valued at $4000 an acre when the interest rates were 4% now have asking prices of twice that with the interest rates of 7%. At the current prices for corn the first 115 bushels an acre goes to just paying the interest on the note.
The cost of a cute, ginger-bread house in the genteel part of Lansing is about $200k. Dilapidated cabins more than 25 miles from the nearest medical facility but have the advantage of not being within city limits are being appraised for more than that.
One of the weird things that sellers do when the housing market gets rocky is to raise their asking price. Their thinking is "I was originally going to ask for 10% more than I wanted so I could let the buyers bargain and shave 10% off the price so they think they are getting a deal. By raising the price, I can let them bargain 30% off the price and still get what I want."
Historically, the housing market dynamic was that the market would heat-up as interest rates rose. People who were planning to move in the next three years pulled their plans ahead to latch on to the (relatively) lower rates. Rates would plateau while policy makers waited for the medicine to work and grind down inflation. This plateau killed construction and home sales. Once the unemployment numbers became embarrassingly high, inflation would be declared "contained" and rates would slowly drop-down to lower levels. The housing market would recover.
There are several factors in play that could make it different this cycle.
- The government is a much larger part of the US Gross Domestic Product than it was during previous cycles. By design, government spending goes up with inflation as opposed to private sector's going down.
- The regulatory climate has become increasingly hostile to production and job creation. Consequently, inflation will not moderate due to increased supply of goods.
- In previous cycles, we could throw the bums out. If we thought Jimmy Carter was a bad president, we could elect his polar-opposite. A significant portion of the country does not believe that their vote matters any more and that Team Biden will attempt to drive the Titanic through the iceberg rather than make course corrections.
Point being, SB and HH are priced out of the housing market for the moment. They have a place they are moving to in September but it is a transition and not a long-term living solution.
Part of getting old is that we have a jaundiced view of what "the kids" are doing. So some of my gloominess is undoubtedly due to that factor. But it also feels very different now. It feels like all of the responsible adults left the room.
A home for every family subunit is a very modern concept. I think they used to call it the "nuclear family".
ReplyDeleteProverbs 19 …13A foolish son is his father’s ruin, and a quarrelsome wife is like a constant dripping. 14Houses and wealth are inherited from fathers, but a prudent wife is from the LORD. 15Laziness brings on deep sleep, and an idle soul will suffer hunger.…
Multifamily housing was for the bulk of the history of mankind a normal feature. Thus, Grandmother had somewhere to live, and the grandchildren had a babysitter.
Thus the Add On style of many homes of that era.
During the Great Depression the most successful families decided together what homes-farms were to be let go as they could not afford the Kings Coin (Taxes) on them as so the family could gather together their resources to keep the one they all lived in.
Having in YOUR Family someone with a real job like post office worker or trainman was the blessing of the whole family.
Those that didn't often ended up on the road (Often died) or in Hoovervilles of tarpaper and cardboard like something from Steinbecks "Grapes of Wrath".
Taxes and Debt servicing was the bane of the average person. Jobs that paid in "real Money" vs store credit or a basket of eggs became quite rare. Bankers guarded by Sheriffs often bought for pennies on the dollar homes and farms.
There was a reason that average people celebrated those murderous souls like Bonnie and Clyde robbing banks and wealthy folks, NOT that they ever gave a thin dime to people.
BUT they were STICKING IT to the Man.
I suspect Great Depression 2.0 with a side of Neo-Technological Serfdom is nearby.
Smart families might want to look at what succeeded for eons before today's "Do your own thing".
During the Depression, my grandfather dropped out of high school because he was offered a good job that helped support the family. He never finished.
DeleteYes, multi generational housing and extended families living either together or very close has been the norm through human history and whenever things get bad it returns.
JH
That sounds like a tough nut. At first brush I can see a handful of issues...people and their personalities. You have a mixture of cultures, too.
ReplyDeleteHopefully the temp solution comes with a rental agreement and not a purchase? Things may look very different 12 months from now.
ERJ, this has been on my mind now as well with the engagement of Nighean Bhan - not that they are looking for housing soon at all, but they will likely need to so in the not too distant future. Housing prices here are as foolish as they sound like they are there, only multiplied by a factor. I have also noticed in my morning walks with Poppy The Brave that more houses than ever are on the market (unusual for an August), and they are sitting for longer.
ReplyDeleteNot that we are in the market to sell at the moment, but it does raise the thought of what to do when we move to The Ranch.
Similar problem here. Housing prices are outrageously high, mortgage costs are rising, and there are very few houses available. It’s not unusual to see only 2 to 5 houses for sale in any town. New 3 bedroom on 1 or 2 acres going for 700k and up. Older house are in the 500k range. In-town condos and apartments are nearly as high.
ReplyDeleteSouthern NH
Asking prices have gone up here, but at the higher end as far as I know they aren't getting higher prices than a year ago.
ReplyDeleteUsually, people shop based on their monthly payment, so prices drop as rates rise; this time that hasn't happened (yet). But as usual, real estate is all local and there are huge variations geographically.
In my area, companies are desperate to hire; they pay ridiculous salaries to anybody with a pulse, making this county the second highest average pay in the state, well above even the big cities - yet we have the lowest average housing prices in the state (note I said lowest, not low!)
Many of the Amish and Mennonite peoples use their land holdings to build multiple homes in close proximity to, not next to, each other to help one another, as well as give each other autonomous lives. It was once this way for all people, and in times like these, it may become this way again.
ReplyDeleteirontomflint
"The government is a much larger part of the US Gross Domestic Product"
ReplyDeleteYes.
They do this on purpose to prevent officially being in a recession.