The cost of new homes is feeling upward pressure due to soaring lumber prices. Softwood lumber, which is normally used in house frames, almost doubled between April 2020 and January 2021, according to the Department of Labor’s producer price index. So reports BankRate.com.
PulteGroup Chief Financial Officer Robert O’Shaughnessy recently said in a call, “Driven primarily by increases in lumber and labor, our house costs will be higher in 2021.”
Extreme increases in lumber prices have caused some people to go bearish on new home sales. Not this one! If we play a version of rock, paper, and scissors with lumber prices and mortgage rates, mortgage rates will win. Mortgage rates have a much more significant influence on the new home sales market than lumber prices, even at their current highs.
Proof of this is the recent new home sales report released by the CensusBureau. New home sales beat expectations by a lot, and all the revisions to the last report were positive.
Last month, I wrote that we should have expected new home sales to moderate after their parabolic rise.
Sales are still working to find a sustainable trend after the massive distortion in all housing data lines due to COVID-19. This recent report, especially regarding the positive revisions to the last report, tells a solid story for new home sales in 2021 as long as rates stay low.
From Census: “Sales of new single-family houses in January 2021 were at a seasonally adjusted annual rate of 923,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.3% (±18.1%)* above the revised December rate of 885,000 and is 19.3% (±19.5%)* above the January 2020 estimate of 774,000.
When reviewing new home sales data, it is wise to keep an eye on the monthly supply. When the monthly supply is 4.3 and below, builders will have the confidence to continue building. This is especially true when the 3-month average is 4.3 months or below. Currently, inventory is at four months with a three-month average of 4.06 months of supply, so it’s looking pretty good. The revisions on this report showed a lower monthly supply than in the previous month.
The low monthly supply is why builders’ confidence is high, despite the massive spike in lumber prices. As a high school basketball coach in my previous life, I know that sometimes all that matters is that you shoot better than your opponents. Don’t overthink it. Better sales plus lower inventor equals increased builder confidence.
Today, the MBA’s purchase application data was also positive by 7% year over year, even with the President’s Day holiday and the Texas snowstorm — two factors that typically hurt applications. Positive year-over-year growth is a good thing.
So far this year, our year-over-year comparisons have been against a “pre-covid” housing market. March 18 is almost here, which means year-over-year comparisons of housing data are going to get funky. If you see scorching year-over-year growth – don’t be fooled that it will be a sustainable trend.
Purchase applications in 2021 have exceeded my estimated peak rate of growth of 11%. I expected to see a trend growth rate between 1%-11% year over year, up until March 18. We are currently trending at 12.375%. The substantial purchase application growth speaks well for housing sales 30 to 90 days out.
The take-home message is that sales are strong, which will contribute to hotter home prices. Right now, we want the rate of growth to cool down.
Next week for HousingWire, I will explain why we should expect to see some purchase application data show weaker year-over-year data in the second half of 2021. There is more to this story than higher mortgage rates.
After dropping from record high levels by a total of 7
points over the last two months, the index that measures home builder
confidence has stabilized. The Housing Market Index (HMI), produced by the
National Association of Home Builders (NAHB) and Wells Fargo, rose 1 point in
February to 84.
“Demand conditions remain solid due to demographics, low mortgage rates and
the suburban shift to lower cost markets, but we expect to see some cooling in
growth rates for residential construction in 2021 due to cost factors, supply
chain issues and regulatory risks,” said NAHB Chief Economist Robert Dietz. “Some builders are at capacity and may not be able to expand production due to
“Lumber prices have been steadily rising this year and hit a record high in
mid-February, adding thousands of dollars to the cost of a new home and causing
some builders to abruptly halt projects at a time when inventories are already
at all-time lows,” said NAHB Chairman Chuck Fowke. “Builders remain very
focused on regulatory and other policy issues that could price out households
seeking new homes in a tight market this year.”
NAHB surveys its new home builder members each month, asking for their perceptions
of current single-family home sales and sales expectations for the next six
months as “good,” “fair” or “poor.” The survey also asks builders to rate
traffic of prospective buyers as “high to very high,” “average” or “low to very
low.” Scores for each component are then used to calculate a seasonally
adjusted index where any number over 50 indicates that more builders view
conditions as good than poor.
The component measuring current sales conditions was unchanged from January
at 90, while the component measuring sales expectations in the next six months
fell 3 points to 80. The index charting traffic of prospective buyers rose 4
points to 72.
Regional scores are given as three-month moving averages. The score in the Northeast
rose 2 points to 78 and the Midwest declined 1 point to 81. Both the South and
the West lost 2 points to 84 and 93, respectively.
Single-family rental (SFR) developer AHV Communities has announced its largest development pipeline to date: 1,500 rental units and over $500 million in committed capital. While a casual observer might see this volume of business as a product of the surging popularity of the SFR market, AHV CEO Mark Wolf sees it as the natural progression of a company that’s been betting on SFR since 2012. He explained that the dramatic uptick in SFR demand in the past few years has confirmed what he’s always known, that SFR is here to stay. Now he believes there’s opportunity in this space for commercial mortgage professionals who can view SFRs in the same industry-leading performance class as multifamily.
“This has been a long journey for us,” Wolf said. “We were one of the first to do this contiguous, cohesive, managed, maintained, and amenitized community, much like an apartment. We’ve been at this for a long time trying to prove a thesis that nobody believed in. Here we are, eight years later, and we were spot on.”
Read more: Non-residential building to decline this year
Now Wolf is seeing the entry of significant institutional capital in the SFR space, as well as developers looking to build on variations of his model. He’s meeting those challenges with a commitment to his original focus on rental developments in inner-core suburbs. This year’s pipeline, however, does reflect the fast-changing market conditions at work in the SFR space.
One of the more novel additions to AHV’s product offering is more duplex and townhome development. Because of significant demand in those inner-core suburbs and the influx of institutional capital, greater density is key to making these projects work. While single family remains Wolf’s main focus, he noted that duplexes hit a “sweet spot” right now that’s driving a lot of success for AHV.
But why not build further out? Why not expand into the ex-urbs that have generated so much interest from homebuyers in the past year, freed from their commute by the promise of working from home forever. While Wolf sees opportunity for purchase markets further out, he believes that renters aren’t as likely to live so far from job centers and key amenities accessible in cities. He’s sticking to an inner-ring suburb model, confident that cities will come back to life and make these zones even more attractive to rent in.
Looking at the whole SFR space, Wolf sees risks in the form of all the institutional capital flooding into new SFR developments. Despite his broadly positive outlook for the sector, he expressed concern that some fringe opportunities might get funded and bring bad publicity to the SFR sector. High lumber prices, too, could have an outsized impact on new SFR developments. Wolf explained that it’s harder to add an extra 15 cents per square foot in rent due to lumber costs than passing along an extra $3,000 in the sale price.
Read more: How will Biden’s infrastructure spending change commercial real estate?
Nevertheless, Wolf is extremely confident in the prospects for SFR developments like AHV’s. He explained that the contiguous, cohesive nature of these developments allows them to function far more like apartment developments, with a means of fostering community among all those who rent there. He believes that developments like AHV’s should be seen in the commercial mortgage community as behaving very much like the multifamily space. He believes that commercial mortgage professionals can capture a real opportunity in an aspect of the SFR market that looks set to last.
“SFR has been proven as a part of the long-term multifamily asset class,” Wolf said. “Mortgage rates are at an all-time low now but as they rise again, more people will be pushed into rentals that are already in high demand. I think there are really good underlying fundamentals in this sector and people in the mortgage business should see this as an alternative to multifamily investments. It’s a great cash flow instrument, it’s got a stable rent roll, and if done properly it could present a very good investment opportunity for long term cash flow folks out there.”
Sales of newly built homes in December occurred at a seasonally-adjusted rate of 842,000 – up 1.6% over the revised November rate of 829,000, according to the Census Bureau’s report on Wednesday. Even with inventory at record-low numbers, that’s still 15.2% higher than the same period last year.
The median sales price of new houses sold in December 2020 was $355,900, up from $335,300 in November. The average sales price was $394,900 in December.
John Pataky, executive vice president at TIAA Bank, said the historically high prices of lumber – pushing overall construction and lot costs up – is partly to blame for the lag in December sales. Indeed, construction continued to play catch-up in December, as new-home inventory rose to a 4.3-month supply.
“While demand is robust, supply is not, and the imbalance will inevitably harm affordability and dissuade buyers from buying,” Pataky said. “Unless we get more existing sellers in the market, I foresee this shortage to continue well into the new year.”
A slow December did not dampen what was a historically successful year for new home sales – the best since 2006, according to Zillow Economist Matthew Speakman. An estimated 811,000 new homes were sold in 2020, 18.8% above the 2019 figure of 683,000.
“Historically low mortgage rates and an ongoing shortage of existing homes for sale stoked demand for new homes in 2020, and it’s likely that the continued spread of COVID-19 also added to the allure of a brand new, never-lived-in home for many buyers,” Speakman said in a statement on Thursday. “The supply of new homes for sale has been picking up lately, but remains low compared to historic norms –– which is likely to incentivize builders to increase their activity, particularly when demand for housing remains solid. Expect the future permit and starts pipeline to be quite full this year. With a banner year in the books, today’s new home sales report set the stage for a solid start to 2021.”
Regionally, the Midwest saw a robust 30.6% increase in new home sales in December, while the West reported a modest 8.8% increase. The Northeast and South both saw declines, with drops of 6.1% and 5.1%, respectively.
As of noon EST yesterday, a new president has taken office. The leadup to his inauguration was filled with uncertainties, political and economic, and the mortgage industry saw the first material rise in interest rates in months. Now, mortgage pros have to face clients in a new political reality.
For Dennis Viera (pictured), loan officer for New Jersey with Philadelphia Mortgage Brokers, the first rule of navigating the transition is to keep personal politics away from client interactions. He approaches conversations around the new administration and any fears it may provoke with an understanding ear, keeping his personal views out of the picture. Doing anything else, in his view, would simply alienate people.
The new administration does present new challenges and opportunities, though. Viera is addressing them with a degree of caution and an advisory approach to his clients.
“The biggest thing I could see being enacted as part of the new administration is the proposed $15,000 first-time homebuyer tax credit,” Viera said. “It would be available as money down, and represent a 5% down payment on a $300,000 home. That’s going to get a ton of people in the game, but I think the issue with that is the people entering the market thanks to the tax credit, who otherwise would have struggled to make a down payment, might still have issues with closing costs. I don’t want the tax credit to make those buyers complacent.”
Viera believes that even with the tax credit, a potential first-time homebuyer is entering a highly competitive housing market. A new influx of these buyers while housing stock is still so low could further exacerbate the problem and potentially force people to take on debts they can’t afford.
Viera is trying to coach his borrowers, getting them prepared for that level of competition while having a conversation about what they can actually afford. He’s explaining the intense competition in the market these days and focusing on a rigorous pre-approval process, so they put their best foot forward.
As the administration changes, though, Viera has to combat an element of misinformation. Whether by rumour, hearsay, or the sheer polarization of the news media in this country, he’s having to talk down borrowers who read that the rate uptick we saw these past weeks will accelerate to dangerous levels under Biden. He has to explain that generally in every presidential transition, rates tick up a bit before settling back down.
While he thinks the tax credit could have some unintended consequences for first-time buyers, Viera is hopeful that Biden’s messaging around the COVID-19 pandemic will help restore a semblance of normalcy to both the lives of ordinary people and the housing market. He thinks if viral spread is better controlled in the coming months, there could be more willingness among homeowners to list their properties and willingness among buyers to reconsider cities again.
Read more: Fannie Mae cheif economist’s forecast for US economy, housing market in 2021
In addition to watching COVID numbers, tax credits and stimulus packages, Viera is taking a look at another key indicator for the housing market: lumber prices. The key building input has tracked up in price again in recent months and he is watching to see whether it can be brought back down again by government policy or market forces.
In the meantime, as question marks still circle the housing market under a Biden administration, Viera is doing the best he can to prepare clients.
“I don’t like to toot my own horn on this, but when I do a pre-approval, it’s the real deal,” Viera said. “I probably waste a ton of my time on these, but I give my clients a full picture of what they can really buy and what they can actually qualify for. Now as we see big changes, I don’t need to change how I’m doing things because I put my clients in a position to stand out.”
As the seller’s market continues, many first-time homebuyers are deciding which route is best for them: buying an existing home or building a new one. While the right answer varies from person-to-person, there are several pros and cons for each option. As the housing inventory shortage continues, new construction has grown in popularity but the demand still outpaces the supply, so many buyers look to existing construction. Understanding what each option entails will help homebuyers make a better, more informed decision in their home buying journey.
Existing homes are often referred to as resale homes. “Resales are properties that are previously owned and re-selling not new.”
How To Know If an Existing Home Is The Right Choice For You
Sonia Graham, Realtor with JPAR Maryland Living advises that “Existing homes are a great choice too – you can tell if the bones are good; neighborhoods are established. Maybe you want something with good bones and a vintage feel that you can also update.”
Things To Consider With Existing Homes
Graham states in the Annapolis-Baltimore area that approximately 65% of recent sales are existing construction and that, “we are in a seller’s market here in Maryland. Homes are being priced really well, however, because of the lack of inventory, homes get sold at higher than listing.” This is true across the U.S. In September 2020, existing home sales increased by 9.4% from the previous month and 20.9% increase from last year for a total of 6.5 million homes.
Total housing inventory declined from the prior month and one year ago to 47 million, enough to last 2.7 months at the current sales pace.What this means for buyers: There are less homes to choose from.
Existing homes prices were up 14.8% from September 2019 and according to the National Association of Realtors “September’s national price increase marks 103 straight months of year-over-year gains.” What this means for buyers: You may pay more for less home depending on your budget.
In September 2020 properties remained on the market for 3 weeks – an all time low according to NAR.What this means for buyers: The market is fast paced and requires buyers to decide and act quickly to secure a home.
Eighteen-percent of September 2020 sales were purchased by cash buyers according to NAR’s data.What this means for buyers: Buyers must make strong, clean offers to compete against the large portion of cash buyers.
For homes that sold in August 2020, homeowners had just over 3 offers on their home according to NAR.What this means for buyers: Expect that you will have to compete and present your highest and best offer every time.
How To Know If New Construction Is The Right Choice For You
Sonia Graham states that with new construction “the biggest incentive is the closing help; using the builder’s lender generally keeps the cost lower for the builder and so they have more room to offer incentives.”
As Graham says, “everyone loves the idea of being the first to live in a home – nothing used by anyone before, everything sparkly and brand new…” However, it’s important to understand no home is perfect; existing or new. This is why Graham strongly suggests “using the home inspector your Realtor works with… red flags will be found in the home inspection.”
“Housing starts had hit 1.617 million in January and fell to 934,000 in May. The recovery hit a snag due to the shortage and rising cost of lumber, with the price of softwood lumber up 81% year-over-year as of September”, according to NAR’s latest data.What this means for buyers: As lumber prices increase, so will new home cost. The increase cost in lumber is ultimately transferred to the buyer.
Thirty-nine percent of buyers choose new construction to “avoid renovations or problems with plumbing or electricity.”What this means for buyers: There should be no looming large expenses like a roof or plumbing with new construction.
Closing costs are negotiable. Unlike with existing homes, builders tend to be more open to paying for some or all a buyer’s closing costs. This should be negotiated early-on and put into writing between the buyer and builder.What this means for the buyer: If the burden of closing costs AND a down payment are an issue, new construction could possibly ease that burden by helping with closing costs.
Builders provide warranties, but read the fine print! Builders will typically provide a one year builder’s warranty; however, they don’t cover everything. It’s advised that buyers request to see a copy of the warranty prior to purchasing the home. Buyers may also purchase additional home warranty options which cover more.
To decide which option is best, it’s important that as a buyer you work with an experienced and knowledgeable Realtor that is proficient in both areas. As Sonia Graham reminds, “Its truly a family by family choice and neither is “right or wrong” as a whole – just “right or wrong ” for the client and their family.” By working with a Realtor, buyers can feel comfortable and informed on which choice is best for them. To start your new or existing home search, download the Homes.com app on your smartphone or search via the web.
Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.
A close friend of mine was diagnosed with cancer this year. It was the serious kind, where you need to treat it quickly and aggressively or it will spread through your body, stick to all of your organs, and kill you.
The diagnosis was a shock to my friend and her loved ones – she’s fairly young, had always been healthy in the past, and had no warning it was coming. But she decided against self-pity and just took the diagnosis with complete seriousness.
In the brief week of calm that she had before the storm of chemotherapy, she warned her children and her colleagues that she would need to make space, because things were going to be much more difficult for a good part of the next year. And then she laid down to accept the intravenous injection of the Red Devil – a chemotherapy medicine so toxic that the doctor needs to wear a hazardous materials suit to administer it.
Every two weeks for the next four months, this primitive and painful treatment would be repeated, beating her down further every time. She lost all her hair, strength, energy, even some of her cognition and ability to speak. Or sleep. Or eat. Then there was some painful surgery and a couple dozen sessions of searing radiation.
And finally, when there was just a faint wisp left of her physical form, some very fortunate news came: the cancer was completely gone.
Thankfully, the very bright spark of her soul remained. It had been kept alive by her own incredible will to survive, but also by the superhero dedication of her family and closest friends, who stepped up in almost unimaginable ways to support her and pull her through that dark tunnel. So this spark began to rekindle as the body around it was allowed to start rebuilding itself.
Her recovery gathered speed as the poisoning receded into the past, and many of the long-lost pleasures of the past felt new and better than ever before. She appreciated physical strength, and good food, and most importantly connections with loved ones in a way that she could never have done before having it all taken away.
And now this woman is back, like a truly badass superhero emerging from the flames and smoke of a wrecked city, ready to make Act Two a thousand times better than her admittedly impressive first act had already been.
This is a real story, and I’m elated and happy that this loved one is still alive and feeling well again. But it’s also a hell of a metaphor for what has just happened to our world in 2020. As one of her doctors put it, she was “poisoned just enough” to cure the cancer, while the underlying human being survived and now has a chance for an unprecedented rebirth.
You and I are now presented with this same opportunity, should we choose to accept it.
Because of COVID-19, billions of people worldwide have just been through a pretty shitty year. The effects have been very unequal and unfair – the world reported about 1.7 million deaths from the virus this year, increasing the human race’s death toll by a full three percentage points compared to a normal year. Here in the US, deaths are a full ten percent higher than normal. But hundreds of millions of people are also unemployed, some having lost their business or livelihood forever. And almost every person on the planet has had to give up some of the most fundamental human need of all: contact with each other.
Friendships, family gatherings, people in love, companies, collaboration, hikes, even kids playing together in nature – they have all been strained and pulled apart to varying degrees. Some of us were lucky to have a big enough bubble of close family and friends to sustain our mental health, but many were not. And we watched the fabric of society get torn apart as we battled and shamed each other over two sides of an issue that are inherently impossible to resolve: a desire to protect other people, versus a desire to have human contact – which is at the core of being human itself.
This shit has gone on for month after month, wave after wave, just like the poisonous flow of chemotherapy, stripping us down relentlessly and fraying nerves and sanity everywhere. But thankfully, it is Just. About. Over.
And instead of mourning and throwing ourselves a pity party for this past year, I think it’s worth looking at all the positive things we have put in place to help us survive, which will start to look even more positive as the Coronatimes recede rapidly into the rearview mirror. (Note: some of these points were provided by my cancer-beating friend, who happens to be a director at a human resources startup firm.)
The Future of Work has suddenly accelerated: working from home has been greatly expanded, with almost universal approval. In the future, we will still be able to hang out with our coworkers in person, but we can do it on our own terms instead of 9-to-5 every day just because the boss says so.
I believe this is much bigger than most people realize – the drastic reduction in commuting, the ability of people to leave expensive metro areas and repopulate small towns that provide a better quality of life, and the ability of companies to lock in the best talent regardless of geography. On top of greater happiness, these changes all provide huge increases in productivity and efficiency, which are the building blocks of all future human prosperity.
Education: Remote learning has shown us that kids can often learn more quickly when we set them free to run at their own pace, and that some (although certainly not all) kids feel safer without the social pressures of school environments . The pandemic has accelerated education-related technology, something that had been lagging in the past just because we were too complacent to make the changes.
Health Care: Phone, video and text calls with your doctor, which should have been a thing since about 1995, are now truly a thing. I hope this trend continues, because it’s more pleasant and more efficient. And you know how I feel about efficiency – it’s the highest form of beauty.
On top of this, the massive infusion of money and effort that went into creating and distributing the COVID-19 vaccine has permanently blazed some useful new trails. For example, the “messenger RNA” vaccines from BioNTech/Pfizer and Moderna are just the tip of the iceberg of some incredible new stuff based on the same technology. It could even become the eventual cure for cancer.
Slowing Down: When the pandemic shut down most of our travel and busy appointments, suddenly the streets and parks filled with people, just out there enjoying a stroll with their kids and their friends. Bicycle sales went through the roof, and remain there to this day.
This is how we should have been spending more of our free time in the first place, because while some travel is valuable and important, to be honest a lot of it was just bullshit. People were packing too much into their lives. Travel and appointments should be like a hot sauce you shake upon your life to add a luxurious layer of spice, rather than the basis of what you do every single day. The reward is greater health, happiness, and wealth and more connected communities.
A More Resilient Economy:
In just one month leading up to March 23rd, more than a third of the value of all US businesses was erased in a Ten Trillion dollar ($10,000,000,000,000) nuclear explosion of fear. Even Warren Buffett, famous for the world’s steadiest investing hand and for the expression “Be greedy when others are fearful and fearful when others are greedy”, became fearful and dumped all of his airline stocks at the worst time.
Five months later, that same stock market was back at an all-time record, the future of the largest companies was looking rosier than ever, and even the regular economy was experiencing a faster rebound than almost anybody had expected.
How did this happen? With the simple combination of human resilience, and the safety margin that is inherent in any well-run life or business. People couldn’t go to movie theaters, so they spent more on Netflix. Lumber prices spiked, but steel prices dropped so we changed some of our house construction to reflect it. Restaurants were forced to close their dining rooms, but we supported them by ordering more take-out.
(Note: some parts of the economy, especially in other countries, are still in the middle of an economic and humanitarian nightmare – there is still much more we can do to help out and we’ll get into some of that below.)
And the toilet paper hoarding? That was just plain herd-mentality stupidity and it should never have happened. But even that eventually came back to the shelves.
So I’ve now watched us come though the Corona Crash, on top of the 2008 Great Financial Crisis and the 2000 Dot-com bubble and bust, all in my investing lifetime. And we just keep going, and we get a bit better at everything with each passing year. Despite all of the disasters, the pockets of corruption, and the dim-witted and power-hungry politicians that we are all too aware of. This has galvanized my confidence that in the big picture, we are not really all doomed.
The world is a good place, humans are fundamentally good creatures, and the more we can nurture this goodness (and avoid fanning the flames of fear, which is the only thing that causes us to be bad), the faster we will continue our rise to an ever-better state of existence.
IMPORTANT: Speaking of Making Things Better!
2020 was a year of increased inequality, which pushed many people further into poverty, while making many rich people even richer. Because of my investments and my ownership of this website, I was (yet again) in that lucky second group. And I suspect you were probably on this side of fortune as well.
Because of these high earnings, and the fact that the total bill for my lifestyle keeps coming in at only around $20,000 per year, this means that I now have the chance to give away yet another $100,000. This brings the total of this blog’s donations to over $400,000 in the last five years, which is starting to sound like some real money!
Where the money went:
$95,000 to GiveWell via my Betterment investment account.
This is by far the most effective way I’m aware of, to make each dollar do the most good for people. The nonprofit organization GiveWell does tireless ongoing research on world charities, and keeps an updated list of which can do the most work with your money, right now.
On top of this, donating appreciated shares from my Betterment account gives me the maximum tax benefit – on my 2020 taxes and all subsequent years. This further multiplies my money’s ability to do good. (And it’s a very easy way to give – overcoming one of the biggest hurdles to getting it done)
$2500 to Bicycle Colorado – it’s not solving world health, but increasing bike friendliness here in the US is deceptively powerful, because we have so much low-hanging fruit. There is still far too much car clown behavior and far too little cycling, but that is changing rapidly in Colorado and other states because of organizations like this one. Our numbers have been growing by enormous percentages every year, and now the city planners and governors have learned to consider bike (and foot) transportation when they allocate their massive transportation budgets each year.
$1500 to the Against Malaria foundation. Although similar to the GiveWell donation above, I gave this amount to support an effort put together by readers of the MMM forum, who have collectively given over $20,000.
$1000 (doubled to $2000 because of an external donor) to plant TWO THOUSAND MORE TREES! to the National Forest Foundation.
Bonus: In last year’s philanthropy summary, I planned to invest $5000 in building and expanding a local solar farm. I didn’t fully reach that goal, but I did manage to add almost 3 kilowatts of extra capacity to the MMM-HQ solar array (my co-owners and I split this expense and my friends at Shaw Solar gave us a great deal on the equipment).
We also upgraded other aspects of the building’s energy efficiency, and we are soon about to “cut the pipe” – by switching the old gas furnace over to a high efficiency heat pump system ($3200), and canceling our entire account with the gas company. This allows us to be a 100% clean-energy facility, as well as ending the surprisingly high monthly fee that Xcel Energy charges us as commercial customers, whether we burn any gas or not.
Where the money came from:
Initially, the sudden recession slammed the brakes on almost all of my income. Many of the companies that allow this website to earn money had paused or canceled their referral programs, most notably things like travel and rewards credit cards, which were sometimes the biggest source of cash.
On top of that, many of our cherished members of the HQ Coworking space paused or canceled their memberships as they either lost their jobs or decided to work entirely from home for childraising or virus-related reasons.
But then an unexpected boom rose in its place: the aftermath of absurdly low interest rates. I encouraged readers to take advantage of them and refinance their mortgages and student loans, and thousands of people did. This led to a different but equally sized windfall, which has brought in enough profit to keep my donations going.
(Note: although my personal spending doesn’t increase, I did also invest the rest of my earnings this year into other businesses, and gave or loaned some to personal, local projects. )
You Should Do it Too!
If you have more than enough money, you should give some away.
Try it. It feels good and this good feeling lasts forever, making your entire life feel more worthwhile. If you are willing, please share some of your donations in the comments (you can do so under a pseudonym if you like).
I will also list this blog’s own main sources of income for 2020 – if even a small portion of readers find these companies useful as I do, it will generate tens or hundreds of thousands of dollars, which I will get to keep using to try to do some more good!
Credible: super efficient (good user interface) and low-cost originating and refinancing of Mortgages <-Well under 3% these days, under 2.5% for 15-year and Student Loans <-temporary $1000 bonus(?!) currently in place with this link!
Travel and cash-back rewards cards: aside from the usual benefits, one good hack I have discovered is to put some of my charitable giving on a new high-roller card, to instantly reach the minimum spend requirement. The charity gets a large gift, and I get the big signing bonus and things like airport lounge access, free hotel stays, etc.
The Coverage Critic mobile phone comparison page: This has been unexpectedly successful, with thousands of people upgrading to cheaper phone plans thanks to my friend and HQ coworker Chris Smith’s expert nerdy-detailed-level advice.
Bluehost web hosting: the place I got my own start blogging, this company offers super-cheap $3 per month web hosting with easy point-and-click site design and setup, year after year, while maintaining a generous referral program that keeps many websites in business. (They also sponsored one of our pop-up business schools!)
Sedera health share organization: my friends serve as advisors to members who they refer to Sedera though their group The Fire Guild. They have agreed to share proceeds with me, and I’m donating 100% of this year’s share to RIP Medical Debt. Every $100 you donate here, forgives about $10,000 of medical debt, so I hope we will be able to get to $1 million of wiped-out-debt within a year.
That’s it for ol’ MMM for 2020 – I will see you in the bright and sparkly future of 2021!
Homebuilder confidence in the U.S. fell to a four-month low in January as builders expressed concerns about higher house prices, COVID-related supply chain issues and construction costs.
Builder confidence in single-family homes dropped to 83 in January from 86 in December, according to the National Association of Home Builders and Wells Fargo Housing Market Index. It’s the second straight monthly decline in sentiment.
Rising material costs, in particular lumber, pushed sentiment down. A resurgence of coronavirus cases also contributed to the weakening number. But builder sentiment overall remains strong, per NAHB officials.
“Despite robust housing demand and low mortgage rates, buyers are facing a dearth of new homes on the market, which is exacerbating affordability problems,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Florida. “Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots and labor shortages that delay delivery times and put upward pressure on home prices.”
The HMI index gauging current sales conditions dropped two points to 90, while the component measuring sales expectations in the next six months fell two points to 83. The gauge charting traffic of prospective buyers decreased five points to 68.
How to gain more listing visibility in a shifting housing market
As real estate professionals strategize on how to do business in 2021’s competitive, fast-paced housing market, they’ll discover the need for better tools to market their listings.
Presented by: Apartments.com
Regionally, the West remains at the top of the HMI confidence scoresheet with an astonishing 95 points – a near-perfect score in terms of builder confidence, even though it’s down one point from December. The South fell one point to 86, the Northeast fell six points to 76, and the Midwest was up two points to 83.
“While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” said NAHB Chief Economist Robert Dietz. “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”
Dietz said in September that higher lumber prices are adding about $16,000 to the cost of a new house. But the pandemic hit the lumber industry hard – approximately 6,000 jobs were lost as a result of the ensuing economic turmoil.
“Growing demand for lumber met insufficient supply, and the result has been escalating prices,” Dietz said.
Inventory has been an issue for real estate agents and brokers since early 2020, as well. Even prior to the pandemic, housing inventory had hit record lows. Total home sales are outpacing new listings by a wide margin every month, and real estate tech company Homesnap foresees the shortage continuing in 2021 unless more sellers enter the housing market.
The month of December saw the largest year over year decline of housing inventory in almost three years, with inventory declining 12%, according to realtor.com.