Exhaustion

I remember writing this time last Spring about the fever-pitch run to the Summer Solstice we had been on not only in the stock market, but in the press and social media as well, and just how manic it seemed. The vibe this year feels very different, as if we are in the last death throes of something altogether unholy. Those in social media land are absolutely enthralled with chasing headlines which I think is precisely the point of those headlines. In my recent posts some of you may have sensed a theme. I believe in times like this it is very important to remain calm. To check yourself. Now that I realize how many times I’ve played the part of useful idiot, questioning from every angle is part of my process. The rigor that takes is not for the faint of heart, and there are not many who apply it because it can be absolutely exhausting to never feel like you are on solid ground.

But that rigor is why I’ve been writing here for two years now warning you about the path ahead for housing. As most of the analysts out there pivot to “minor” correction or slightly lower home prices (few dare to really think this through), I find no joy because I know the damage they have already done. And then there are those who still refuse to see the writing on the wall or the distress in the consumer and speak with such certainty it blows me away. Like Burry’s character at the end of The Big Short, I have lost respect for many through this process as I realize just how shoddy of a foundation on which they stood. On the other hand, I have found the true-blue analysts out there for which I am extremely grateful.

I believe, like me, the market is exhausted. We’ve all been extending and pretending, staying alive til 25, etc., but it’s last call and nobody was really still having fun anyway. We can choose to watch Wrestle Mania, or we can get busy living and making decisions that will matter for our families. I worked for a politician who was deep in the machine, and I can tell you that what we see in headlines is not at all what’s actually happening. I can tell you that folks who think they are Washington insiders are being played. Instead of reading the headlines, read the bill. Instead of reading what others are saying about an interview, watch it yourself. If you don’t have time to do that, take some time to step away and re-focus.

This week I stepped away a bit to tend to the garden and my family. What Helene taught me was that the people that matter most are the ones right around you. And if you aren’t surrounded by any, then you need to go find some. After years of isolating myself, believing all that individualistic propaganda us GenXers were fed to convince us that striking out on our own away from our families was the path to happiness, that’s exactly what I did.

Source: BEA and Census via FRED

The average household size has fallen steadily since 1947. When looking at population divided by # of households, that number dropped to 2.55 in 2022, the lowest observed. For the past two years it has stayed steady at 2.57 annually but I believe in 2025 we will see this increase even more. Think about this for a moment not only as data but in context of your life. After spending nearly twenty years living in the same corporate apartment in different cities across the nation, I realized I would probably end my life in a very similar one in a retirement home if I didn’t make some changes. I had to face my bullsh*t. Through that process and diving into macro the last few years I realize just how much the trajectory of my life was impacted by these forces and by falling for the propaganda that achievement was the only goal.

My post this week about the increase in purchases of multi-generational homes provoked some very interesting responses that ranged from boomer-anger to really thoughtful takes on how this need is bringing families back together. It brought my family back together. One follower suggested that my decision to move my Mom in with me was because we had a good relationship. That could not be further from the truth. In fact, it was the exact opposite. I’ve talked about how my grandfather lost his farm after Reagan refused to save the farmers which led my family down the poverty, drugs and alcohol path. There was a lot to forgive but when you realize that it didn’t really start with them, that we are all just doing our best to survive, that by always trying to be the hero or the victim you will alienate everyone around you, then you can find the necessary grace. Some days are easier than others but no longer do I seek to harden my heart and my scars.

Why am I sharing this? Things are about to get hard, really hard, after already being hard for many. The entire country is waking up to a balance sheet crisis. No one will be immune. Timing of impact may be different, but the music has stopped even though there are those still dancing. In a video I did this past week with John Comiskey and Laks Ganapathi, we discuss just how much obfuscation has occurred by loss mitigation programs or by mark to magic by some big players who are waiting until someone calls foul to take the writedowns. We also discuss impacts to student loan borrowers and SNAP recipients if the bill is passed in its current form. These policy decisions will be the noose around the neck of the bottom of the K which will then lead to pain at the top of the K. And, we are going to have to make those interest payments on our national debt somehow. Despite a current lack of political will to tax the top, the only way to pay the bills is to tax the remaining wealth somehow. They can stimulate all they like, but as we can see since the GFC those returns have been lackluster. When we have the highest number in tracking of folks working two part-time jobs to make ends meet, you know something just ain’t right.

Despite private credit doing its best dead thrall chant to keep the party going with creative financing products that will end horribly, we are nearly there. Instead of lamenting the situation or being angry at an entire generation, make preparations and reparations. Is some of that anger deserved? Sure, but what good does it really do? Anger and fear (often masquerading as anger) can kill. Let the action figures and cartoon characters battle it out…it’s time to mend fences.

For today’s post we will stop in Boise to dive into market dynamics there. The disconnect between the listing price and sales price in Boise warrants investigation. As detailed in a story in the Idaho Statesman today, Lending Tree recently ranked Boise second only to Portland for the worst housing outlook in the country due to low vacancy and the mismatch of median incomes to home prices. Population has exploded in Boise, increasing nearly 28% from 2014 to 2024. Like many cities across the country Boise experienced growth from those fleeing areas like California for a more affordable option. Similar to Denver, Boise believed they would be the new tech hub and dubbed themselves Silicon Valley West. That trend started before COVID but was exacerbated by it. With population growth came new jobs in construction and real estate as well as ridiculously high home prices. We will look under the hood to see what’s next for Boise. Additionally, I will share the city observations and summary for April results. Our story is no longer a story just about Florida, Texas and California. As our credit crisis continues to brew, those cancellations everyone is carrying on about are wreaking havoc all over the country.

I’m hearing from folks impacted by cancellations on Long Island, in Westchester County and Los Angeles to name a few. Some of the names on the motivated and distressed selling lists below might genuinely surprise you, so let’s get started…