Housing Holds – Long in the Tooth?

The good news is the Housing report from Case-Shiller is pretty good:


The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.4% annual gain in December, up from 9.5% in the previous month. The 10-City Composite annual increase came in at 9.8%, up from 8.9% in the previous month. The 20-City Composite posted a 10.1% year-over-year gain, up from 9.2% in the previous month.

Phoenix, Seattle, and San Diego continued to report the highest year-over-year gains among the 19 cities (excluding Detroit) in December. Phoenix led the way with a 14.4% year-over-year price increase,
followed by Seattle with a 13.6% increase and San Diego with a 13.0% increase. Eighteen of the 19 cities reported higher price increases in the year ending December 2020 versus the year ending
November 2020.

However, looking at the rest of the data?

Before seasonal adjustment, the U.S. National Index posted a 0.9% month-over-month increase, while the 10-City and 20-City Composites both posted increases of 0.9% and 0.8% respectively in December. After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.3%, while the 10-City and 20-City Composites both posted increases of 1.2% and 1.3% respectively. In December, 18 cities (excluding Detroit) reported increases before seasonal adjustment, while all 19 cities reported increases after seasonal adjustment.

“Home prices finished 2020 with double-digit gains, as the National Composite Index rose by 10.4% compared to year-ago levels,” says Craig J. Lazzara, Managing Director and Global Head of Index
Investment Strategy at S&P DJI. “The trend of accelerating prices that began in June 2020 has now reached its seventh month and is also reflected in the 10- and 20-City Composites (up 9.8% and 10.1%, respectively). The market’s strength continues to be broadly-based: 18 of the 19 cities for which we have December data rose, and 18 cities gained more in the 12 months ended in December than they had gained in the 12 months ended in November.”

To be sure, we’re not too keen on the “seasonally adjusted 1.3% monthly gain” number, preferring the 0.9% unadjusted.  We’re very untrusting of adjustments.

There’s one other aspect, too:  Look at the Housing price change, Year-on-Year:

Urban’s Bottom Line

We have no quarrel with the Case-Shiller report and the 10.4% gain in home prices in the most recent calendar year.

However when taken in context of a cratering economy (almost 10-million fewer people are working compared with year-ago levels), and even the annual seasonally adjusted H.6 Fed Money stocks report for M2 is up in the same period  25.8%, Ure’s Housing Axiom is proven again.

It holds there are only two ways to own property:

  • One option is to put minimum down, say 10% if you could.  In this way, on a half-million dollar home, you would have $50,000 of money “at work” while a 10.4% increase in Housing prices would increase the home price enough to actually “make money” on the home even if H.6 inflation is high.
  • The other option is to own outright, but then you’ve got a very illiquid asset.  This works well when you don’t depend on location-based economic activity.  The Bay Area, for example, is still “hot” but the Detroit real estate bubble popped long-ago.

It’s best to own a home, no doubt.  But how much depends on your confidence level and outlook on forward prices…

Write when you get rich,


35 thoughts on “Housing Holds – Long in the Tooth?”

  1. Florida real estate still doing generally well. We still have economic refugees here from the blue states as well as the usual retirees looking for a warmer climate. Of course, there are other states doing even better like Texas on the immigration front from blue states, but after this winter’s ‘deep freeze’, it’s difficult to tell if Texas will still have that Lone Star shine!

    I expect real estate to do very well as the dollar is pumped to the moon and more investors realize that they need to get something at least tangible (and perhaps even useable) for their digi dollars. In the end, it is a great rotation out of digi dollar assets into physical, ‘hard’ assets – whatever they may be. There is lots of uncertainty, BUT – there is one thing VERY certain – the Fed will print and the Federal government will spend. Btw, second on the certainty list is low or relatively low interest rates for the foreseeable future. I don’t see another Paul Volker coming to light.

  2. There’s a reason real estate always does well in Florida and other southern climes…

    It’s because nobody retires and moves up north.

  3. Now that I’m going to be back to work as soon thursday this side of winning the Powerball. Which still could happen. Weirder shit than that has happened in my life.

    I’m staying put for about 4 months. Stash $40-50k, keep my out put way lower than my input. And who knows ~The Zero Report~ could go viral and change everything.

    One of my favorite books is how to live on $10k a year. When I look at my monthly expenses beside good and fuel. My output is 1/2 of one paycheck. That gives me 3 and a half paychecks to stash. Minus food and fuel. So 3 paychecks when I’m working. If I stash 3 paychecks a month for 5 months then use my zero down 1.25 % fixed VA loan to buy a place out on the woods? I will have a nice cushion for when the fence around the White House and all them national guard will be useful for those inside.

    Gonna start looking at some property over mid east of the mountains. Right now I have giant room in a house. I mean I have an office, bedroom and all that in there. And room to do yoga, stretch and work out. I can keep that for a while. When I’m working 80+ hours a week. What more do I need. A bed, shower, food and and a naked woman to scratch my back once in a while. Lol.

    I been researching them Pole Buildings. Or Build a shop, put a 5th wheel in it and live in that for 6 months then build a container home. Pretty cool stuff. Pretty good deal. Just need a well and a septic on the property. really like the idea of a container home. Pretty good deal too. Put in about 30 solar panels. I still remember how to make them out double pain windows. Get those for free on Craig’s list. Hmmmmm….

    I have bought alot of fixer uppers. Last one paid $180k for. Built in the 40’s on 2 acres. Did all the remodel work myself, electrical, insulation, put in a French drain, re surfaces the oak hardwoods that were under the carpet, new windows and new lap siding. Lived there for 5 years and sold it for $390k. Cost me about $12,000 total plus a lot of sweat over 5 years to fix and up grade everything. Pretty good return.
    I like having a big deck and a wrap around porch. That is a necessity. sit out there with the Sheppards and drink coffee, have a ponder.

    Morning seattle commute was easy peasy. Usually it’s a fricken nightmare if hit the 530am wave.

    Owning a house. Lol. Except that government rent. Aka tax.

    Off to grab 18 gears.

    Have a good day George and crew.

    • Oh dont wottu, I ain’t doing yoga. I sure like watching her do tho.

      Ha ha ha ha

      I did switch to doing crossfit tho. I dont like being so bulky. burpees are the devil. I think they should call them pukeys. I crank out a bunch of them every day, do a bunch of lunges for warm up, before my 27 min of HITT cardio then go lift weights for an hour.

      Bench pressing 450lbs is great. Until you have a hard time wiping your ass because your arms are too big. Lol

    • “Container Living” is common here in the jungles of the Big Island. One and three acre lots on a gravel road in the wilderness here are cheap, and many near-broke retirees will set up a container and live off-grid with solar power and propane. I know four ham radio operators that are doing this. One has a good job as a facilities manager at a medical center. Ex wife and daughter, now adult, were his financial downfall, and now at age 60 he has not much to retire on. Got the lot and container and lives frugally on his salary until retirement. Gotta have a big, mean dog and some home defense, though, or the drug heads will destroy anything in sight.

    • I used to know some traveling craft people. One jewelers set up comes to mind. A used diesel full sized school bus that was reworked to a living quarters in the rear 2/3’s with RV kitchen and bathroom, a small bedroom and a small living area. The front was a workshop for casting jewelry and finishing. She lived there most of the year and traveled from show to show weekly.
      That would be perfect for you because it would give you a base to build your dream house in the bush. Sure there’s some downsides but without adversity there’s no meaningful growth imho.

  4. Question? How can one afford a Home if 2x4s, 2x6s, and 2x12s are ridiculously expensive? Making cabinetry and other wooden items more so. Then we do not take in credit all of the other industries of home goods starting to rise. Something rotten is a brew?

    • Sheet goods like OSB are off scale, and used goods are hard to find. 2 x X can be recut from used lumber – sometimes. Alternatively, just use raw old boards that are recovered from whereever. This works well unless you’re under the code/inspector gun. Yet another reason to turn codes into advisories rather than de-facto laws. They kill creativity! We used to live as individuals with caveat emptor rules. Today, everyone is molly coddled and infantilized in the name of “protection” and “safety”. We need to take responsibility and recognize that life is unsafe. It’s also finite, and few of us can afford to take enough precautions to satisfy the regulators. Has anyone ever calculated how many extra minutes/hours/days people waste in buckling and unbuckling seat belts? The same goes for every other regulation with no risk to anyone but ourselves. We all used to have the choice to wear seat belts or motorcycle helmets, or comply with best practices in building, but today most of us are stuck with doing all these things by the book or we’re subject to legal penalties. That’s not America, it’s the exact opposite of what’s stated in the Declaration of Independence.

      • Easy two-step fix for all of it:

        1) Neuter liability claims on pre-existing (as in “used”) items.
        2) Make all insurance illegal.

    • “Question? How can one afford a Home if 2x4s, 2x6s, and 2x12s are ridiculously expensive? ”

      Ok..a home selling for fifty thousand will easily have a payment of five hundred a month. A hundred thousand a thousand..etc. at fifteen an hour that’s half of your income..plus insurance etc.. so to answer the question.. you can’t
      I had a grand daughter ask me to cosign for a place.. the payments on the place is two hundred more than I take in..
      Rent is just as high..in an apartment complex..
      A bank loan officer and I was discussing this a year ago..to buy a million dollar house they require a half million income. Someone working a wage job wont get it..
      Unfortunately theres a heck of a lit more in the fifteen dollar an hour income range than in the half million dollar a year income range..

  5. Real estate is doing well with available money and many city areas fully built out in their desirable directions. Several western cities are built out as far as possible toward various mountains. Albuquerque usually has 4000 houses available in the realtor markets(retail), but now there are only 700. Supply and demand, along with financing. The financing rates might change, but the supply/demand situation is less likely to in the desirable areas.

    A couple of relatives snagged a foreclosure at a good price with 3% financing. There’s nothing we can’t fix easily with our various family skills. I prefer the opposite approach where I don’t have to lose sleep to pay a mortgage, but they’re young and have lots of energy. I’m sure that they’ll do well, and they have to live somewhere anyway.

    • I meant to say 3% down. Hopefully they get to take advantage of the first time homeowner whatever that’s being discussed in DC. We’ll see.

  6. I’m trying to figure out what the heck Congress is trying to do. New incoming president usually has a hundred days where he has to show that he can get something done. So far they’ve been peddling away 30 of that hundred days fall on this year hate Trump campaign. That’s all you see in the news. You have a virus that mysteriously is cured. You have 30% of the households in the country all about the put on mass and fiction. Another 30% that was using credit cards to survive. You have a failing infrastructure. You happy a scene. Cascade Event in Texas that could happen all the way across the country and infrastructure that is rated at an F. We have Runway medical expenses. Runaway Fuel and utility expenses. Thousands of refugees converging On the Border all welcomed in over 10% of the ones that are listed yet are not unemployed and you know another 15% that are at least dropped off of the unemployment list. Yet nobody can concentrate on anything other than the past presidency. So what in the hell are they thinking and then they’re going to go on vacation. So what is Congress actually doing besides nothing.
    You would think that there would someone there that would have some more concerns other than that

    • I imagine that most critters in congress are looking for a new country to ravage! I think congress still has a lower popularity rating than our putative and demented president. Just think of rats and sinking ships.

      • “I imagine that most critters in congress are looking for a new country to ravage! ”

        THATS IS MY FEAR MIKE…. Historically we have gone to war.. this time though the small countries that have the resources that those that endlessly want.. have signed agreements with Russian and China to be their allies in the event that the USA wanting goes in to destroy rape pillage and plunder and steal those resources..
        War would not be the answer.. we will know for sure in a couple of months when the big guy is on Television and all the news crews are pushing the lets destroy narrative.. and the big guy says whole heartedly.. ITS THE RIGHT THING TO DO…. LOL..
        the other part of that scenario that worries me is .. those sworn to protect these small countries from the greed.. also makes our military armaments’ with their industry.. they are also running reconnaissance flights together.. the debate is we are the biggest military in the world.. but.. we are also in over two hundred countries and our congress is opening the border to those illegal refugees that have already come right out and said.. we will send in warriors posing as refugees as a trojan horse……

  7. If you bought a house for 10% down and it appreciates 10% you made 100% on your money. Of course , if you bought a flipped house and need to replace the furnace, water heater, half the plumbing and electrical, and the roof blows off you could lose 100-600% after you pay property taxes and furnish the place. That also ignores the loss of the value of time spent mowing, shoveling and minor maintenance.

    otoh, if you owned an average house during those steep value rises you could stack the equivalent of an additional average working salary, not counting sales costs and relocation. The government around here is a drooling, sticky-fingered beast with a large inventory of “tax forfeited” properties watching values going up. Around here, it currently costs $500+/month in alms to be allowed to stay in your $500k house, but they have staff appraisers to stay on top of that if it can be raised.

    As long as house prices are strong, indicating a good economy, it seems equal or better risk to trade high yield reits, bdc, mlp and buy only how much house you need. Trading costs are a lot less than house jumping. How many house sales are 2nd homes? (That is a real question, I can’t find those numbers) It seems the market may cool about the same time owners get tired of taking care of 2 houses.

    • True to a degree, but everyone needs to live somewhere. Presumably, you could live in a house for two years while fixing it up, then sell, move to the next and do the same thing, and continue for as long as you wish, while pocketing any capital gains tax free. Of course, there are carrying costs and closing costs, FWIW.

  8. I’ve been thinking. (the wife would disagree) With Uncle Joe going to start his push against the 2nd amendment, doesn’t it seem reasonable that there should be some sort of orchestrated incident waiting in the wings??to sort of help give Uncle Joe’s push a little momentum?? Just saying…

    I am curious to see one of these incidents backlash and cause the average citizen to realize that the gooberment can not (or will not) protect them and therefor they need to be able to protect themselves.

    Which brings me to a question. Was the final report on the Las Vegas incident ever released by LVPD or Clark County SO???I sure never heard of it??

    • There will. Give ’em time. CPAC is coming up and Mr. Trump will announce he’s forming an exploratory committee for 2024. This will make the Leftist Media’s collective heads explode. Cammy O’Biden will take advantage of the ensuing two-week media TDS shitstorm to pass a bunch more Imperial Edicts, which no one will notice.

      I would not be surprised if a mass-shooting incident trotted itself out either shortly before, or during the Conservatives’ little party…

  9. A few thoughts from a CPA:

    1. People don’t buy houses, they buy payments. They will purchase all the house that they can afford the payment on. Their spending is like a sponge that will absorb all available income. “We can afford it, it’s only $XX per month.” Monthly payment-itis. When they get a few years’ of “cost of living raises,” they have some breathing room and get new cars, boats, jet skis and other toys.

    2. Most people don’t buy a house. They buy a lifestyle. Build some equity, push all the credit cards to the limit on toys, two+ car payments. Property values go up, so they refi all that credit card debt into a new mortgage for 30 years. Repeat. Or they “need” a new house in a better neighborhood to keep up with their friends (who are on the same plan, BTW). Then of course they need new curtains and bigger chairs and wow our old couch looks like shit in this new house, so we “need” one of those, too. And we can’t park our 15 year old Toyota Tercel in the driveway, we need to show the neighbors how successful we are so we “need” to trade that in on a Cadillac SUV. Repeat. So they N E V E R get ahead. They never get to even. This is why doctors never get rich.

    3. Houses are not “investments.” Investments make you money. Houses cost you money. Taxes, repairs, cutting the grass and replacing windows. Don’t go into a house thinking it’s an “investment.” True, it is usually the largest asset that most people will ever own. True, a house will usually appreciate in value. But remember that is still requires regular cash infusions to keep it from going away. That’s not an investment.

    4. Home ownership is not for everyone. One of our kids should not be homeowners. It’s been 3 years since that sprinkler head broke and they still haven’t repaired it. Not that it matters, because they aren’t going to do anything to make that grass grow. They have never killed a weed. And it’s not because of lack of money. They should be living in a condo or something where someone else does the maint. The giverment has screwed us taxpayers by encouraging people who should not be homeowners to buy homes they cannot afford and will not take care of.

    Wanna get wealthy? Learn to live below your means and be satisfied with what you have. Invest the difference in something that will produce long term passive income. Passive meaning that you incur the cost once and it continues to produce cashflow with little to no additional labor input. Real estate, start/buy a business, dividend stocks, etc.

    That is all

    • What an excellent post!

      For a minute, I thought I was reading “How to Prosper During the Coming Bad Years” again.

      “we need to show the neighbors how successful we are so we “need” to trade that in on a Cadillac SUV.”

      When playing the “keeping up with the Jones’s” game, people judge their neighbors, not by how much they make, but by how much they spend…

      My son spent several years delivering pizza. Among many other neighborhoods, He delivered to a McMansion enclave. After the 3rd or 4th time delivering there, he commented that the people living in those expensive, fancy houses didn’t have any furniture.

      I explained that their finances are so-stretched that they can’t afford the kind of furniture they believe they need to have, to impress their “friends,” so rather than buy what they can afford, when they have guests over or throw a party, they rent a house full of furniture for a few days.

      • “he commented that the people living in those expensive, fancy houses didn’t have any furniture.”

        YUP.. that is how the interior decorator got into her jam.. they would stage the house if people were coming over.. the other one that made me laugh was they would redecorate not pay then a year later tell the woman they just couldn’t tolerate it being out of date and want her to remove it.. and then redecorate.. LOL (Her husband was asking for a divorce because it dawned on him that he was making all the payments for them LOL)
        delivering pizza’s was an eye opener.. they would hide the house signs.. and turn off all the lights etc.. wouldn’t answer the doors.. just to get a free pizza.. in the more posh neighborhoods they didn’t have the door bells hooked up.. so you would push the door bell and nothing.. everything was on paper.. Now if the Kid called ordering.. you fought over who got to deliver it.. because the kid didn’t care where the money is.. they had rich parents and was willing to spend it.. ( there was a motel heiress that was on tv a lot with her antics a while back that gave a great example on how that worked.. )

      • RE: no furniture.

        I’m a work-at-home self employed type. So I go to lots of client’s houses to meet, pickup, deliver, etc. Back in 2006 I started to notice that my clients in new half million mansions with a cadillac and mercedes SUV in the driveway DIDN’T HAVE ANY FURNITURE. I mean we would have to meet standing at the kitchen counter because there was no kitchen table or couch.

        I buddy of mine was managing a burger joint in one of these developments. I stopped to say hi, and he told me that “we have these people charge a $7 hamburger, and their cards are being declined. We make deliveries and these people HAVE NO FURNITURE in their house.”

        I came home and told my wife “something’s wrong here.”

        We got our retirement funds out of the market. We were about six months early, but we lost ZERO in the crash.

        We are here again. Prepare accordingly.

        When you start to hear radio commercials for flipping houses, it’s time to get out of the housing market.

    • George surprised me, too. I KNOW he’s read Howard Ruff, but I’ve never seen him accede to this bit of the philosophy before:

      “It holds there are only two ways to own property:

      One option is to put minimum down…
      The other option is to own outright…”

      The (theoretical) advantages to minimum are you get your foot in the door on a low mortgage rate, and if you somehow lose the property, your losses are limited.

      The advantage to owning outright is “peace of mind.”

      I prefer a third way, which is to take out a very small, very long-term mortgage. Why? Because it entitles the homeowner their State or County mortgage exemption or credit, which comes right off the top of their property taxes, and the lender will escrow for both insurance and taxes, giving the homeowner one less check to write and two fewer periodic headaches.

      Bear in-mind, if we’re talking “forever home,” the value, worth, and appreciation of the property are moot (except when the County Assessor comes around.) They’ll only matter to your executor and beneficiaries…

      • Not to put too fine a point on it, but yes, I did know – and talked a lot with Howard when I was a news guy – and it was questions like this – esp. your third way – that were most interesting. I can’t speak for Howard, but to me the risk associated with ANY mortgage is that someone – besides YOU – has a call on your property. It’s not worth the risk of letting someone else be in line for your title if it’s something as trivial as a single additional check (taxes) per years. And again, paying someone to save your own money FOR YOU? No, I just don’t see that option either.;..

    • CPA. Your post is regional and does not reflect the reality of all big markets. A house IS an investment. And probably the best investment anyone will ever buy. For every dollar I put into a home for a visual improvements, I get $3 back. That’s fact. I do this for a living. But…it’s unique in my area. If I buy a fixer for $1million. Put $200k into it…I WILL sell it for $1.6Mil+. My investors and I have done that 21 times in the last 24 months. And that’s just my flip business. For those selling their homes to upgrade or downsize…my company will lend them up to $100k interest free to update the home for re-sale. It’s usually the visual improvements like new kitchen, baths, paint, floors, landscaping…yesterday, we went into contract on a home we listed in Los Altos, in the heart of the Silicon Valley. It was a trust dale and the house was original..old wallpaper, dated kitchen, etc. But, the area is very desirable. Big lots, great schools and high prices. We tested it pre-sale and pre-renovation and received initial,officers of just under $2.8 million. We put $110,000 of improvements into it and 3 weeks later..(our contractors work fast…they are superstars) we received 28 offers and sold it for $3,704,000. Now that’s how you make a house an incredible investment.

      • I agree on making a HOUSE into an incredible investment – if that’s your goal. Making a HOME will often reduce the value of the property as an investment since you’ll do what you wish and the money be damned. Happiness is a loftier goal than raw dollars, with the tax consequences and extra work involved being yet another downside.

        I regard my primary residence as a sunk cost. I don’t consider it an investment beyond its nominal value as property and structure. Other houses are for fun – financial and otherwise, since I can do as I wish if I don’t offend the neighbors. I enjoy building, though I’d make more money if I used contractors. Being “retired”, enjoying and playing with my stuff is more important than maximizing ROI and dealing with regulators, audits, etc. I have enough money for now, and tomorrow is uncertain at best. At least I have no desire to show off wealth of any sort – my ideal is to blend so well that I’m invisible. I drive simple cars and functional trucks, and they rarely break. The insurance bill is minimal too. The greatest joys in life for me can’t be bought with money – and certainly not in the USA.

      • Mark: You are not “buying a house.”

        You are making a targeted investment in an income and cashflow producing INVENTORY (otherwise called “a house.”)

        That’s called “a business.”

        That’s the last paragraph in my original post.


  10. Proof of a psoptic Sith Lord even publishing this garbage George . What a scam you promote . Mussolini was part jewsih

  11. George,

    Several writers/readers have speculated about another mass shooting. Make no mistake, in my opinion there will be another to push the anti-2nd amendment agenda. Only problem the Dumicrats have is that due to their strict Covid-19 shutdown rules; the children are not in schools, making for easy targets. They also have to line up the necessary “patsy” to take the fall for the actual shooters. Soon as schools are back, the pieces will align for the next “horrific” event.

    Most people misunderstand that the 2nd Amendment was added to protect the citizenry from the government, as well as each other. People talk of a gun grab triggering the next civil war. Won’t happen for that reason. Once in place, the gun laws will be used to perfection without general civil unrest. The powers that be will pick a few poor soles of which they will make an example. Those people will be put in prison forever and everything they own will be forfeited. The rest of the sheeple will fall in line and voluntarily surrender their guns.

    At that point, we will have to learn from the Palestinians and get better at throwing rocks; or from the VC at making booby traps. End of the day, it is the same story, ” He who has the biggest guns, is leader”. With an unarmed populous, they will have no problem imposing their will. To these ruling “elites”, we common folk are pawns to be used as they see fit, (unnecessary eaters).

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