Washington County, WI – Hard to believe we’ve crossed the line into October. Every year me, my dad, and brother take a short trip somewhere to try something new. This year, my brother Pete took us musky fishing up in Green Bay. I’ve never gone after a fish as large as a musky before.
We were at the launch at 6:30 a.m. and had our trolling set up by 7 a.m. It’s definitely a slower fishing pace than what I’m used to. Every time the rod would bend you’re thinking you have one.
At around 8:30 a.m. one rod was hooked on a musky and the reeling began. It was on one of my rods, about 200 feet out. My arms and shoulders became tired quickly. The fish surfaced, just as tired. In the net and ready for pictures! Bucket list item checked.
Photo courtesy: Al Wisnefske
According to Wharton Professor Jeremy Siegel, there is great inaccuracy in relying on the Consumer Price Index as an inflation gauge because it is backward-looking in nature: the declines happening in housing right now while rent prices begin to level off simultaneously won’t be reflected in the CPI for months. Housing currently accounts for about 40% of core CPI, one of the two main data points the Fed uses to make monetary policy decisions. Siegel believes the Fed made an enormous miscalculation by not raising rates in 2020 as the massive stimulus was being injected into the system, thereby fueling inflation. Now he sees them making even bigger errors.
“Any inflation rise that is still going to occur as monetary tightening takes effect is not worth the price of crashing the economy, to stop a little bit of that inflation that’s in the pipeline: you’re going to crush wages and unemployment.”
– Jeremy Siegel (CNBC)
The only certainty in life and markets is …..change. We are used to this. And while many of us became comfortable in 2021/2022 with a super-strong market, most of us knew that level of transacting and super-low rates would end. It is so much easier to do all of this when things happen slowly, but the changes happening right now in 2022 are happening rather fast, especially the rise in interest rates. We live in roller coaster times. The very deep COVID-triggered recession that happened in 2020 was followed by a very sharp recovery.
So how will things play out in the final quarter of 2022?
1. I would expect the FED will continue its policy of higher rates as the data they see is badly delayed. They were slow to raise rates for the same reason. They will be slow to see the full impact of these higher rates.
2. Buyers will be obsessed with the “what if” mentality: if they wait, will prices come down further? Smarter buyers will rather use this moment of uncertainty to negotiate thereby having the opportunity to focus on quality, not just price. There is one thing worse than buying a bargain: owning one.
3. Sellers will adjust their expectations and lick their wounds by not having sold at a premium when they could have. They will still do very well but will have to be far more patient. Many will offset ‘losses’ if they are buying something else. Sellers educated with real-time, curated, specific data from a professional agent will adjust to reality quicker.
4. Inventory levels will increase, but there will still be shortages of certain classifications. Reduced construction combined with under-building, trillion-dollar infrastructure building, repairs, and replacement construction are almost certain to make replacement costs continue to rise.
5. I think we will see some Deflation. Rents may scale back in areas. The threat of recession globally is pushing down the prices on LOTS. Energy may be the outlier. The sales at retail will be INSANE. (PS: Even Bergdorfs and Neiman Marcus are discounting already….in September.)
Work or the content on WashingtonCountyInsider.com cannot be downloaded, printed, or copied. The work or content on WashingtonCountyInsider.com prohibits the end user to download, print, or otherwise distribute copies.
Subscribe
FREE local news at Washington County Insider on YouTube
