theDirt Weekly: Gettin by on gettin by
April 8, 2022
Yeah gettin' by on gettin' by is my stock-in-trade Living it day-to-day Picking up the pieces wherever they fall Just lettin' it roll Lettin' the high times carry the low Just living my life easy come, easy go… Gettin by by Jerry Jeff Walker
The bluebonnets are lush and beautiful. There is grass, and it is green. The rye-wheat-oats mix I planted last fall is coming along. Compared to this time last year, those of us hacking out agriculture in the central Texas scrub are doing better. But just barely.
The problem, dear reader, is that despite the lushness of the wildflowers and greenness of the pastures, the ranch is still in the midst of a stage 3 drought. According to my very nerdy excel spreadsheet-rain-tracker-thingy, our rolling twelve month average is 9 inches below the historical benchmark average (30 inches). And the total measurable moisture of each of the past few months have also been below average. Appearances to the contrary, we are still hard up. And it doesn’t take long to show. In those desperate times between rains, the soil quickly cracks and the leaves of the bluebonnets fold in. The grass begins to dull. And I begin to worry yet again. The moisture in our soil is a bit like food at the grocery store: sufficient for a day or two but once the supply stops coming the shelves get real bare real quick.
For the past few weeks the only rains keeping the vegetation green have been relatively frequent but very small drizzles. Those last a day or less and produce, at most, about a tenth of an inch of measurable moisture. It is beautiful rain in its own way and the plants love it. Low and slow. But there just isn’t enough. The vegetation quickly photo-respirates what little comes down from the sky. And so we’ve none extra to improve the drought and bank away a bit of moisture for the coming hot months.
And whereas those in the North (especially in Westeros) might fear the Coming of Winter, those of us in the hill country southwest fear the Coming of Summer. Especially if we’ve not stored enough moisture in our soils. Then it gets real bad. Like real-real bad. Like last year bad. Or 2011 bad. Or the 1950s bad. Those horribly dry years where there was nothing for livestock to eat because the grass was dead and gone and the hay was north of $200 per ton. Where desperate and broke ranchers lined for miles outside of sale barns, pick-ups towing cattle-heavy trailers and idling on hot, dry country roads. And they waited. Just as I wait now. As we all wait now. For something to happen. For a shift one way or another. Some place beyond the barely getting by. Some place where a person can make a real decision and not hem-and-haw about what might happen next. We wait for rain. For things to get better. Or continue to grow worse. We wait for all the chaos of the universe to tell us something useful, actionable. And in the midst (mist) of little, Spring drizzles we have just enough to stay green but not enough to get better. And so we wait on the hairy edge.
Sideways for a long time…
I’ve written previously of my thesis that, economically, we will likely go sideways for a long time. Because Uncle Jerome and the Fed have this thing about threading needles and soft landings. Because they want to have their cake and eat it too. Because we all want the good but not the bad. Because we want the product but are not willing to pay the price. And so yield curves remain stubbornly inverted. And then sick banks are backstopped when depositors flee. And tech bro’s entire deposits are insured way outside the promised limits. With promises of more for other regional banks if things get bad (or not, depending on the day). And yet more promises that some banks are systemically important and will never-ever fail. And so the promise of an economic torrential deluge evaporates into nothing but a spring mist. The economy is a dry, droughty pasture full of green shoots; unable to sustain life without little drizzles of liquidity now and again. And so we wait.
Thus far into this year, sideways seems to be the trend. Employment is still hot but slowing. Employees are still in short supply. But layoffs are happening. Consumers are still spending but revolving credit is inching steadily up. Real estate is still astronomically unaffordable but decreasing in price only very slowly. Mortgage rates popped last summer but have been pretty steady since. There has not been much in the way of new housing inventory as everyone… chooses to wait. And so we wait.
And as I spend the weekend coming up for air from the depths of ranch labor, I search for news and also Easter eggs and think: ho-hum. Not a lot new here. Just edging along. More of the same. Just gettin’ by on gettin’ by. And so I take a deep breath and get back to work. Because beef prices are great, and I need to make more grass.
Treading water - or- what it all means for real estate
It is hard work treading water. One expends a great deal of energy getting nowhere. Of course the skill of treading water is vital to those trying to stay afloat in the deep. It’s just that one doesn’t want to be swimming thus for too long. Eventually we all must stop treading water and make a decision of where to go next (or pass out and sink to the bottom). The good news (or bad news) is that holders of real estate can generally tread water for a very long time. Sans debt and with enough cash to pay taxes, a land owner can tread water for years. Or decades. Of course, any reader of this rag knows that we are a debt driven market and there is a great deal of adjusting debt on a lot of commercial real estate coming due soon. The piper will eventually be paid. But for now we wait.
However, for those willing to dive deep, the good news is that there are land deals to be had. Right now. They just take a lot of hard work (and a LOT OF LUCK) to find. But once you find them, the real estate market is so thin and at the beginnings of credit starvation that, more and more every day, those with cash call the shots. And those who need to sell are coming to the stark realization that 2023 is not 2021. There are no luscious rains of credit and ever-blooming prices. Nor will there be again for a while. Currently we are in a money-tightening drought. And we will be until theFed capitulates in the face of… something. In which case the grass will come again in thick patches everywhere. But who knows when or how or whey that will happen? Not I, dear reader, not I.
Coda: theBeef
Dear reader, this week is naught but a short post. I spend more and more of my time these days working and thinking of theBeef. While I find the study of markets and economics (our Culture of Exchange) to be ever fascinating, and especially as those pertain to real estate as an asset class, I am also trying my damnest to start a grass-fed, ranch-raised beef business. Perhaps my head is too full of suburban hipster dreams, but I think that the meat industry is at the forefront of a dramatic shift in the way that protein is produced and marketed. Consider: in days of yore there were only a few beer brands to choose from whereas today the shelves are full of a range of delicious options from ever more micro-breweries. Same for wine. Or whiskey. I think that meat (and especially beef) is at the forefront of a micro-beefery concept. Where a consumer can chew the fat and devolve into the blissful terroir of a certain steak from a certain ranch. Where fine beef is treated as fine wine. Where small-batch cattle ranches are tourist destinations just as desirable as any winery. Perhaps more so.
And so while I will endeavor to continue to write a column every week, theDirt will be dished more on a bi-weekly basis and its companion column theBeef will be written in between. For a while I will post links to theBeef under this heading to give people a taste of theBeef. But ultimately you will see less of me here and more of me there.
And I am also toying with the following brand under which theBeef from a variety of local ranches (each with its own flavor, or terroir) could be marketed. It still needs to be cleaned up a bit but please tell me what you think…
Whether it is theDirt or theBeef, I end today’s column by thanking you, dear reader, for giving me the time of your very busy day. Somehow these scribblings have acquired a small but very faithful readership. And while all writers might wish (even if it’s deep down) to have the influence and reach (and wealth) of a Rogan or Rowling, I am honored to have your attention and would continue on for nothing more but the promise of the same. So thank you. Also Happy Easter and good luck this week as we all keep on gettin’ by on gettin’ by.