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September 29, 2022 | Is a Fed Pivot on the Way?

  With inflation at 9.9%, the Bank of England (BoE) had to step in (i.e. “pivot”) yesterday and announce that it would re-start Quantitative Easing in order to lower interest rates and save the British economy from collapse. This was an emergency move by the BoE because leveraged pension funds were getting margin calls on […]

September 21, 2022 | Look Out Below!

               The Fed voted unanimously to raise the Fed Funds rate by 75 basis points today – up to a range of 3.0 to 3.25%. This is the third straight rate hike in a row of this size. With inflation at 8.3% in August, “high inflation is very painful for people at the lower end […]

September 8, 2022 | One More Reason to Leave California?

California wants to ban gas powered cars, yet it can’t keep the lights on and the A/C running during a typical summer heat wave. And they want to add millions of EVs to the grid that can’t even support itself with the current demand. Meanwhile the Texas and Arizona power grid are holding up nicely […]

September 3, 2022 | Making a Million – My Way

Buy low, add value, and sell high is my favorite strategy for making money in real estate. My wife Pam and I plan on buying a high-end fixer in San Diego at bottom of the next housing cycle – and then move into it. We will rent out the home we currently live in, and […]

August 26, 2022 | The Fed: Cold Shower on the Way

Fed Chairman Jerome Powell gave a hawkish speech today about how the Fed was going to do whatever it takes to get inflation back to 2%. How will this change in Fed monetary policy impact housing prices? If the Fed keeps its word in its commitment to bring inflation down to 2% (it’s 8.5% now), the […]

August 25, 2022 | “OMG. My Rent Just Went Up 10%”

    You:   OMG.  My rent just went up 10%.   Econ PhD at the Fed:   Yes, but when adjusted for 10% inflation, your rent didn’t go up at all.   You:   Are you nuts?  What is wrong with you?   Econ PhD at the Fed:   I went directly into government work after spending 15 years […]

August 21, 2022 | Wealth Lessons from History

   What you see is the normal order of nature – and this distribution has withstood the test of time.    You will get a similar result with 10 baseball players, 10 race horses, or 10 real estate investors.   The median salary of a MLB player was $1.15 million in 2021 – yet Manny […]

August 18, 2022 | A Tale of Two Housing Markets

  Home price volatility is significantly greater in the California housing market when compared to the U.S. housing market. There is more upside potential during the booms – along with more downside risk during the busts.   

August 9, 2022 | Is This Time Different?

     For the fourth time since 1988, the spread between the 10-year and 2-year Treasury yield has moved below 0.0%.    As shown by the shaded areas on the chart, each of these time periods preceded U.S. recessions.                 1989:  Yield Inversion.  Recession                 2000:  Yield Inversion.  Recession                 2006:  Yield […]

August 3, 2022 | Inflation Explained

Milton Friedman (1912 – 2006) was an American economist and statistician who received a Nobel Prize in Economics in 1976. In the 1960s, Friedman declared that inflation is ‘always and everywhere a monetary phenomenon’ — a problem of printing too much money. The 29 second video below explains why inflation is  just like alcoholism   […]

July 20, 2022 | Peak Housing Unaffordability? Are We There Yet?

 [Exerpt from July 15, 2022 Timing Letter] As reported by NAR, the U.S. Homebuyer Affordability Index for the nation fell from 124.0 in March 2022 to 102.40 in May. That was the lowest reading since July 2006 – which was near the peak of the last housing bubble. In the aftermath of that bubble, the […]

July 17, 2022 | DIY Remodeling Comes with Bragging Rights

Customers are seeing massive price increases from remodelers, and they are starting to push back.   Instead of hitting the “pause” button – do the work yourself.   I recently built these architectural trusses into my Master Bedroom ceiling.   I did all the work myself – including the design.   Cost of materials:  $350.00 […]

June 29, 2022 | “A Wolf Lives by Its Legs”

A wolf’s body is very strong and powerful, making it easier to kill large prey like a deer or elk. But a wolf must also run with great speed and agility in order to catch the faster prey. In humans, upper body strength makes you look strong – but lower body strength makes you invincible. […]

June 25, 2022 | Rise in Rents Sets New Record In April

  April 2022 marked the 13th month in a row of record-setting rent increases for single-family homes. Nationally, single-family rent jumped 14% year-over-year in April (Source: CoreLogic).   Here are the cities where rents increased the most – and the March median priced rent for each: Miami: 40.8%  ($2,519) Orlando: 25.8%  ($1,947) Phoenix: 17.8%  ($2,157) San […]

June 17, 2022 | Has Inflation Peaked?

  Producer Price Index (PPI) readings for May 2022 are shown in Table B above. Observe that the highlighted column on the right is about double that of the highlighted column on the left – and it’s been that way for the last 12 months. Because it takes a while for rising costs to work […]

June 13, 2022 | Real Estate Timing Model – Update

Due to the COVID pandemic, a nationwide moratorium was placed on Notices of Default (NODs) and Foreclosure Sales from early 2020 to late 2021 – which tainted the integrity of that data.  I was therefore forced to stop inputting that data into my Real Estate Timing Model that is shown on page 7 of my […]

June 8, 2022 | Are Today’s Home Buyers Really Terrified?

  Today’s home buyers are terrified. At least that is what you would assume from the May 2022 Home Purchase Sentiment readings that are published each month by Fannie Mae. This sentiment index fell to 68.2 in May 2022 – and is inching nearer its 10-year- and pandemic-low of 67.5 in April 2020. Surveyed consumers […]

May 31, 2022 | Swimming with the Tide

    Have you ever watched sea turtles swim to and from the beach? These magnificent creatures are always swimming with the tide – and never against it. Real estate investors might want to consider taking the same approach. You don’t have to be invested in real estate all the time. Instead, Try only Swimming […]

May 24, 2022 | Money Illusion

                         By pumping up the money supply and forcing interest rates to record lows, artificially inflated U.S. asset prices are like a circus mirror …                  … people are tricked into believing they are wealthier than they really are.  

May 15, 2022 | Human Nature Is Amazing

Everybody wants to buy real estate when it is up 100% – and nobody wants to buy when it’s down 50%. If you want to kick-butt and out-perform the pack as a real estate investor, you can’t do what everybody else does. You have to sell greed and buy fear – and not the other […]

April 29, 2022 | The Fed: To Hike – or Not to Hike in May

    To fight inflation, the Fed hiked short-term interest rates by 0.25% in March – and they are expected to hike rates by another 0.5% when the Fed meets next on May 3rd.   Does the Fed keep raising rates because inflation is at 8.5% and rising? Or does the Fed stop raising rates […]

April 22, 2022 | Second Order Thinking

Second order thinking is essential if you want to be a superior investor. Most real estate investors, however, only consider the first order effects of economic events – such as a downturn in housing prices. Conversely not spending time to consider the second order effects of market events can result in you missing out on […]

April 18, 2022 | Savers from 18 to 85 Are Getting Totally Screwed

  The Fed has been screwing savors for decades – but with inflation at 8.5% and rising, now it’s a real negative-yield bloodbath. Savers use to get 5% or 6% in a Certificate of Deposit 20 years ago.  With a $1 million, you could make $50,000 to $60,000 in interest per year without touching the […]

April 13, 2022 | The Rising Price of a Sandwich

  The above illustration shows how much more expensive sandwiches have become in the last 12 months ending March 2022. Those percentages are based on actual price changes that have occurred compared to a year ago. Yet according to the government inflation figures from the Bureau of Labor Statistics, the cost of food in the […]

April 12, 2022 | Will 5% Mortgage Rates Tank the Housing Market?

  The average 30-year fixed mortgage rate spiked to 5.02% on April 5th, the highest since November 2018. Rates have gone from 2.73% to over 5% since August 2021.  That’s a record percentage rate increase over an eight month period.  Monthly mortgage payments have abruptly jumped up by 25.8%. And rates are likely to go […]

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