1/12 The Year Of Disinflation
The Delta Between Supply / Demand Increases, Inflation Data Keeps Rates Low, Absorption Rates Declines
This newsletter is 710 words and should take about 5 minutes to read.
Read last week’s newsletter here → "1/6 Guessing Game"
Nick Saban has announced he is retiring. An iPhone survived a 16k-foot drop to the ground (I drop mine from my table and it shatters). Rental car company Hertz is selling 20k electric vehicles. South Korea is banning the sale of dog meat. Michigan won the college football national championship. Over 60 countries will be having elections in 2024 (The CIA will be working overtime in 2024). And a guy lost weight by eating Costco hotdogs for a week.
The market’s inventory is declining while buyer demand is increasing. This is leading to a more competitive market
The average mortgage rate is 6.69%
Inflation is continuing to decline
Wall Street Bets is undefeated in poor financial advice
Phoenix
In a development that will bring joy to sellers and dismay to housing-crash forecasters, all 17 cities are now showing an increase in their Cromford® Market Index over the past month.
There has been an average increase of 10% in the Cromford Market Index for the 17 cities, significantly more positive than the 6% increase we recorded last week. The trend in favor of sellers is accelerating as listings go under contract at a faster rate and supply remains well below normal.
Leading the charge are Fountain Hills, Gilbert, Glendale, and Surprise. The laggards include Tempe, Maricopa, Cave Creek, Avondale, Buckeye, and Paradise Valley, but even these are now improving for sellers.
The Affidavits of Value recorded during December by Maricopa County show the following
There were 5,007 closed transactions, down 13% from 5,758 in December 2022
There were 1,385 closed new homes, down 18% from 1,685 in December 2022
There were 3,622 closed re-sale transactions, down 11% from 4,073 in December 2022
The overall median sales price in December was $460,000, up 2.2% from December 2022
The re-sale median sales price was $440,000, up 4.8% from December 2022
The new home median sales price was $506,330, down 2.9% from December 2022
Sales counts were weak again in December, with re-sales even lower than in November, which is unusual.
Prices were moderately higher than a year ago for re-sales and the market as a whole, but the new home median was lower than last year,
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of January 12th, 2024, the CMI has increased to 113. Up 2.7 points from 7 days ago.
Supply has decreased by 8 basis points and demand has increased by 8 basis points.
Rates
7-Day rate change: -8 basis points
YoY change: +62 basis points
Average interest rate: 6.69%
Rip inflation
The Consumer Price Index (CPI) is the biggest name in monthly inflation reports. It's caused big reactions in rates many times over the past few years. In recent months, it's been showing more and more promise regarding a return to inflation levels that would allow for significantly lower rates.
The much-anticipated CPI print was released this week. For those seeking evidence that inflation will soon be back at the Fed's target level, it wasn't the triumph it might have been. Even so, rates managed to move lower.
In my opinion, the biggest market mover is the FOMC meetings, and when Powell opens his mouth. The next FOMC meeting is January 30th - 31st.
Take notes wallstreet
Subreddit r/Wallstreetbets responsible for the GameStop craze in 2021 is infamous for poor financial advice and questions. This past week, following the Alaskan Air Boeing door plane incident a user asked a very out-of-the-ordinary question.
To summarize:
“If I were to bet against Boeing’s stock mid-air while we are crashing, would that be considering insider trading?”
This post surfaced all around finance on Twitter and Instagram making fun of the comment. It was too funny of a post not to share with you all.
It's like The Minority Report, the crash was priced in before it even happened. Sorry, bro.
S&p500 weekly vibe check
Meme, tweet, & fact of the week
Twister was the first movie released on DVD.