The Down and Dirty this week
Real estate and the heaping pile of a little more bad news · Sugar rushes and candy hangovers · Powell plans to give celery to kids for Halloween · Employment headed down · Farmers are in a bad mood · OPEC drama · Facebook ditching NY office space for greener pastures
Real estate adds a little more to the already heaping pile of bad news
Uuuuuuggh. Fine. This is a real estate rag so I imagine we should just get this out of the way up front. Real estate is sick. It is getting sicker. Even Fortune magazine is writing eulogies. Welp, fellow real estate nerds, this is our reality for a while. It’s a drag, I know. And I’ve written an entire essay (Dirty Thoughts) about a guy named Dirty Larry and where he is taking all of us on our trip from here to there. Look for it on Sunday.
In the mean time I note only that we continue sliding down a slippery hill. Where we stop nobody knows. And because it makes me sad and hurts my feeling (singular, I’ve only one feeling) I will move on to something more entertaining.
Markets look forward to Halloween because candy
The financial markets were up at the start the week. Which is ironic given the Doom and Gloom of the chattering class over the weekend. But I am a fan of Texas Aggie Football and quite accustomed to erratic emotional swings so no biggie for Your Humble Author (probably the reason that I only have one feeling remaining). Interest rates eased down a smidge which was cool. Stock markets rallied. For a brief moment, everything was cool man.
Everyone had a guess as to why the market popped. Word was expectations of a Fed pivot mostly. Personally I think it is because the entire world spent the weekend getting excited about costumes and candy. Maybe they even did a little pre-emptive candy consumption over the weekend and got a sugar high. That’s right, folks, the market rose because candy; get your high-powered market analysis and explanation here at the Dirt.
Sadly, sugar rushes tend to end in sugar crashes. So along came Wednesday and we found the market passed out on the couch with a ring of chocolate around its mouth. Then it vomited on the floor, interest rates spiked back to fever levels, and the market spent the rest of the week in bed1.
I don’t think that our economy is exactly healthy enough to stay on the all sugar diet (low interest rates) that we enjoyed last decade. We might have a touch of insulin resistance to contend with. We had some blood work done and the results are not great:
Word on the street, kids: do NOT trick-or-treat at Jerome Powell’s house this year
The Kids. Act I, Scene 1
Kid 1: Bruh! [said in the breath-y, clipped, staccato way in which all Zoomers incessantly grunt this word] did you hear that old man Powell is giving out celery for Halloween this year instead of peanut butter cups laced with cocaine and amphetamines?
Kid 2: Wuuuuuut? He used to be so cool.
Kid 1: I know! What a boomer.
Fin
Despite high hopes and fresh signs of economic malaise, the Fed kept beating the drum of raising rates in the War on Inflation. Uncle Jerome isn’t fun anymore. He says don’t do inflation kids, and Just say NO!
All the Fed’s spokesmen offered little in the way of succor to those hoping for a pivot. Sorry kids, time to eat your veggies.
They took our jooobs (but not really)
Cracks are showing in the labor market. Well they were until the BLS released still hot employment data. So who does one even believe anymore?
My primary concern is the Fed’s game of chicken with the economy. This thing won’t turn on a dime, guys. I have zero confidence that the Fed won’t overcorrect like it usually does. The Fed has been driving the economy like its a Ferrari on a blacktop when its really a supertanker in rough seas.
Farmers are in a bad mood (but I am not sure how this is news)
I love farmers. Because like me farmers are the most cynical optimists of all time. They are always waiting for bad news. They are always ready for the other shoe to drop. And yet year after year they keep going at it and thinking, surely this year is going to be the best year ever.
Well, I guess they have a right to be a touch on edge after this year’s droughts and surging fuel costs and surging input costs and surging land costs and… man all of the sudden I am in a really bad mood. All of you farmers should all go watch some Peter Zeihan talks on YouTube to make yourselves feel better.
National Beef Wire: Farmer Sentiment Drifts Lower, Rising Interest Rates Contribute to Uneasiness
Mean Girls 2: The West v OPEC+
I follow a lot of very smart energy peeps on Twitter and Substack. In recent months, I’ve studied and become more aware of energy and its fundamental importance to our economy. Previous to this, and maybe like many of you, I took energy and all of its life-giving forms for granted. This is because for the past century or so, we have all lived in a world of relatively cheap energy. The reality of today shows that we are all very, very spoiled.
Many of those Energy Big Brains that I follow make the compelling argument that, at least for the time being and until we change our errant ways, the era of cheap and ignorable energy is over. The theme of today and the future will absolutely be a worldwide struggle for energy resources. Look no further than the plight of Europe in the face of this winter as confirmation. Look also to the Mean Girls spat between the west (led by the U.S.) and OPEC+.
Here’s the skinny: we want more cheap energy (oil). They have had enough of our crap. We dish the Dirt about a murdered journalist (Khashoggi). They cut oil production even more. Next thing you know Emily tells Lily tells McKenzie that your boyfriend Chad soooo made out with Jenna at the Homecoming dance last weekend and all because you told Stacy that you didn’t like Taylor’s hair. OMG! A mole hill is now a mountain and fireworks ensue. The popcorn’s in the microwave, guys, and what’s gonna happen next? I’ve no clue but tune in next time for another episode of The Oil of Our Lives. Followed immediately by Guiding Off-gas Light and All My Roughnecks. All brought to you by Exxon. Cue erectile dysfunction ad.
Fringe Finance: OPEC Humiliates President Biden on a Global Stage
Of course I should explain just what this has to do with real estate. Last week I made the quip that Average Joe gets to choose between a car, a house, or food. Well, I probably should have added that old Joe must also choose between fuel for that car, electricity for that house, and ever more expensive food. Food, ladies and gents, is absolutely one of the most energy intense necessities out there. (I highly suggest reading my hero Doomberg’s substack for an energy education. It may change how you view the world. It certainly did me.) Anyway if Average Joe’s income-pie ain’t getting any bigger but the slices taken out do keep getting bigger then pretty soon Joe won’t have any pie left for rent. Or a house payment. You get the drift, right? The coming world will be one of same-sized pies but growing pieces. This will necessitate choices and trade-offs (see below). It will affect every aspect of our Culture of Exchange.
Dallas Fed: Dallas Fed says inflation surge badly eroding many American's wage gains
P.S. If you are a real estate professional in the Great State of Texas and don’t know at least a little about energy then you might be doing yourself a disservice. Again, Doomberg.
Facebook skedaddles from fancy-pants NY office building
Oh man what a big drama show in the commercial real estate world. Meta (stupid name and I will call it Facebook from here on) is buying out of a big-time office lease in New York. Word around town is that they have been engaging in some under-the-radar employment reduction and that more lay-offs are coming. Aside from the very entertaining back-and-forth amongst the CRE Twitter-atti, I find this to be a very important signal for us peasants in a few different ways.
Point one. For those of us in the Austin sphere, I’ve previously said that I worry over the condition of the tech industry. And Tech has been taking it in the teeth. Mass layoffs in the tech space would affect real estate in the Austin metro area if they materialize in a meaningful way (emphasis ‘if’). Facebook, boys and girls, doesn’t have a huge Austin presence. Those in the know might riposte that even if Facebook laid off every single one of its 1,200 employees, that is a drop in the bucket. Very true. But my concern comes in the form of the snowball effect: if Facebook starts down this path, who might follow and how big of a snowball might that create? Might it turn into an avalanche? It is an important question to consider.
Point Two. On the Brighter Side, the article linked above is flowery and effervescent in its excitement about Facebook doubling down in Austin. In this day and age, I find it important to take every word from old-world, mainstream publications like the Austin-American Statesman with a very large grain of salt (I question their incentives). However, I absolutely do NOT discount the idea that the trend of Big Tech leaving Cali or NY for greener (and more reasonably priced) pastures might continue. If it does keep on keepin’ on like this, if Tech stabilizes and invests in Austin, then we might look forward to a badly limping but still standing Austin housing market. Frankly, dear reader, in my mind neither possible future is guaranteed or even likely at this point. There is still too much going on and too much fuse left to burn. I think it could go either way depending on which way the double-pendulum swings.
Dancing like no one on my Zoom meeting can see me
Point Three (continued from the Facebook drama noted above). The Work from Home culture wars are heating up. News abounds of big corporations demanding that people come back into work. The passive-aggressive reply-all opinions state that Work from Home is here to stay and that, given the high cost of every-damned-thing these days, working from home is a personal cost savings for employees. I am in the latter camp (I would be since I work from home and love it). I’ve discussed this with some in the former camp who insist that the office is the place to be (mostly boomers who spent their lives in an office).
Folks, the cat is out of the bag. We ain’t getting her back in there without some serious claw marks on the face and a risk of Cat Scratch Fever. For the laptop class, some form of work from home is here to stay. This is especially true for Big Tech. Dell employees still work from home, and I’ve not heard much chatter about its largely vacant campus. The Dells of the world have quietly recognized and come to grips with the new face of reality. Sorry office brokers and corporate managers, in the words of that epic Boomer,
What does any of this drivel have to do with land?
In the wars to come, my thesis remains that we are headed for some form of stagflation. In the future of my imagination, energy and other supply constraints will increase inflation. Real personal incomes will decline. Real profits will decline. And the dismal truth will become the age-old choice of trade-offs. Which is a fancy pants way of saying that people will have to cut costs. They (we) will have to economize. They (we) will have to focus, prioritize, and choose in ways that We, Humans™ have not had to do in a few decades.
And one way to do that is to seek cheaper housing. Cheaper housing can still be found in rural communities. Sure, there are those who will want to stay in the city. Those types will cut costs in other ways and stay in their cities. No problem (for me, at least). Then there are those who will want to escape from the concrete jungle into the cool, green pastures of the country (as a Texan I write that last part with laughing sarcasm - after this summer scorched plains of hell is a more apt description). In the ever-increasingly connected and connecting work from home world, I wager (emphasis on wager) that this will remain a trend. People will be able to live in a (relatively cheaper) small-community like Cameron, Texas or Rockdale, Texas and commute into Austin a couple times a week. The bedroom communities will get farther and farther away as people chase affordability. Those small communities on the fringe but still caught in the gravity-pull of those blackholes called cities will feel the benefits (and the drawbacks) of the Great Reorganization that is already underway. I’ll wager that small, outlying communities looking to grow and/or revitalize and who will cater to the WFH crowd would do very well in the future.
Great Reorganization is the key. We are at a catalyzing moment in history where that behemoth Super Tanker that is culture is tacking hard to starboard on the oceans of history. She ain’t gonna turn on a dime folks, but turn she will. And once she gets set on a path good luck changing her back. The world and the way it worked yesterday is in the past and will remain in the past. It ain’t coming back! We must turn now to face the future. Cultures will adapt and societies will create ‘new normals’ based on the conditions of today. So we must brace ourselves against the bulkheads as our vessel is smashed both by waves of change and by the whirlpools of resistance. I know that you are getting sea-sick, dear reader, and so am I. But these things happen. The only constant, after all, is change.
Texas Land This Week.
The following information comes from LandWatch.com. (Read Data Disclaimer2)
As of October 2, 2022 there were…
13,888 acreage properties listed as Available
1,085 acreage properties Under Contract
2 properties up for auction
Five counties with the most listings:
Grayson County - Texoma Region (278 listings)
Edwards County - Edwards Plateau West Region (256 listings)
Hunt County - Dallas Prairie Region (235 listings)
Erath County - Cross Timbers Region (225 listings)
Gillespie County - Highland Lakes Region (223 listings)
For the last 7 days there were…
613 properties listed or changed
7 properties marked as under contract
3 properties identified as Sold
Five counties with the most listing activity in the last 7 days:
Edwards County - Edwards Plateau West Region (21 listings)
Erath County - Cross Timbers Region (17 listings)
Fannin County - Texoma Region (14 listings)
Gillespie County - Highland Lakes Region (13 listings)
Cass County - Northeast Region (11 listings)
Boring but Important News.
Interest Rates (Compliments of the Mortgage News Daily app for iOS and my iPhone).
YOWZA!!
Financial Markets (compliments of the MarketWatch app for iOS and my iPhone).
The Dirt Recommends.
What? What did I miss?
It’s a big world out there and there is a lot going on. There is no doubt that I missed something important. If there is something relevant to Texas and real estate that I missed, please leave it in the comments.
Where I get my information:
An analyst’s analysis is only as good as the information they possess. As the old programming saying goes: garbage in-garbage out. The following is a list of my sources…
I follow a bunch of smart people on Twitter. A sample is represented above. You may also follow me on Twitter:
LandWatch.com and LandsofTexas.com
MarketWatch App (market quotes and data)
FRED: Federal Reserve Economic Data, Federal Reserve Bank of St. Louis
North Texas Real Estate Information System and Heartland Realtors
Houston Association of Realtors
As did Your Humble Author’s entire family. My house sounded and felt much like a tuberculosis ward this week. You can see where my mind was.
Disclaimer: The information is based on properties that are greater than 10 acres and which I refer to as ‘acreage properties’. This information is single source. Which means that this is NOT an exhaustive list of all properties available and sold everywhere in the Great State of Texas. Texas is a non-disclosure state and is therefore a Dark Market. This means that there are a great deal of data that are hidden, dispersed, not allowed to be shared publicly, or just plain unavailable. The following information is for reference and entertainment purposes only.