Come On Home — If you have roughly $400k lying around, as that figure is now about the median sale price of homes in the United States. Sounds crazy, but when you factor in recent reports from the National Association of Realtors that existing home sales have reached a 15-year record high, it makes a little bit more sense.
Low rates and WFH triggered an absolute frenzy in the housing market since the pandemic began. First-time homebuyers flocked to snatch up what they hoped would be a ticket out of their parent’s basement while iBuyers like Zillow and OpenDoor did everything in their power to make sure those buyers went broke in doing so. On heavy demand with quickly reducing supply, prices shot up. But that didn’t stop homebuyers.
Even with those ongoing dynamics, 6.1mm existing homes changed owners in 2021, an 8.5% increase compared to 2020 per the NAR. Moreover, turnover rates, or the amount of time it takes to sell homes, plummeted as buyers floored the gas pedal to move into their new houses ASAP. Homes “typically sell now in about a week,” according to NAR chief economist Lawrence Yun, giving us mild 2006-vibes and causing concern for realtors that these buyers don’t know what they’re getting themselves into.
But the all-cash offers and waiving of contingencies keep coming. Americans just want a new house. Keep in mind, however, that rates have been at zero for nearly two years now, and consumers are drowning in cash more than ever. Subprime loans and ungodly amounts of debt are playing a microscopic role this time around, so if you fancy yourself to be the next Michael Burry, maybe chill out a bit. (I sure hope I don’t regret saying that.)
Digital Fiat Currencies — Confused yet? You’re welcome. Now allow me to clear up that seeming oxymoron in the section header.
A few years of waiting and a 40-page reading later, we finally get a peek at the Federal Reserve’s thought of issuing a digital dollar. On Thursday, the central bank dropped maybe its most anticipated report in recent memory, weighing the pros and cons of a digital dollar. Of course, the Fed’s primary skill is first and foremost to obfuscate and confuse the public on their own opinion of contentious issues like that of a CBDC, but let’s try to parse the double-speak as best we can.
As far as bulls and bears go, the Fed is more of a pig. The report “took no position” on the adoption or rejection of a U.S. CBDC, but it did highlight pros and cons. The pros primarily revolved around a faster national payment infrastructure that doesn’t use ancient methods like ACH and the ability to reach previously unbanked citizens. The downsides, however, included concerns of enabling fraud, money laundering, and other financial crimes that definitely don’t happen already and have never, ever happened before.
Now, this paper was far from intending to be a final decision. The Fed described it as the “first step in a public discussion.” Talks will be ongoing, but already the Fed has plans in place to implement the 24/7, rapid payments network called FedNow in early 2023. One way or another, Alexander Hamilton’s financial system is coming to a full-speed collision with 21st-century technology. And it’s about time.
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