23 and Me
Posted on Sunday, June 20th, 2021
All the talk in the hood is about the real estate market. Every day I hear another story of another long time neighbor getting huge sums for their houses just days after listing. Zillow came out with its numbers for May 2021 and house prices are up 22% on an annualized basis!! We are seeing homes routinely go for 30-35% more than they sold even just two years ago. Prices went nowhere for years and now they are off to the races. It really is fascinating to watch unless you don’t own a home. It feels like 2005 all over again. Prices march higher as there is just too much liquidity in the system holding mortgage rates down. Another factor helping the real estate here in Georgia is the SALT tax revision in the Trump tax plan. That has masses leaving the high tax states and they perceive our real estate market as cheap compared to where they are selling. We think this could go on for another year or two given central bank policy on rates and QE. The SALT tax and the pandemic are just exacerbating the issue. A home is not just an investment. We wanted to rent in 2007 after we sold in NJ (and fled a high tax state) but the kids needed stability. Financial decisions are not always strictly about the numbers. There is emotional capital as well. Spend it wisely.
Last week we had this to say. The bears have two weeks to get the market down or the bulls may press their case. The first two weeks of July is historically the best two week period of the year. The thing we forgot to tell you is that the last two weeks in June are statistically the worst two weeks of the year. The bears got an early start. The market this summer is shaping up to be what we predicted – like a Rollercoaster. Up – down – all around – You end up back where you started and it probably cost you money. That is the real reason you “sell in May and go Away”. Stay calm and go to the beach.
We stated several weeks ago that the inflation trend was getting long in the tooth as investors were crowded into those positions. We noted that their conviction would get tested. Friday was a big test. We will know next week if anyone studied. Low volume summer markets are prone to wide swings. Best not get caught up in it. We are out on the blog for the next two weeks as we will be traveling and writing our quarterly letter. Mom is turning 80 and her 5 boys and their families are all getting together to celebrate. 23 of us in the same house! Happy Father’s Day to all the dads!! And the mom’s that make us look good.
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.