by Dick Hall-Sizemore
I keep reading and hearing that the housing market has cooled. Well, the folks in my neighborhood have not gotten the message.
About three weeks ago, a house a block and a half from me went on the market. It quickly went under contract. Then, a couple of weeks ago, a “For Sale” sign went up in front of a house near mine. Within two or three days, the owner had five offers, at least two of which were for more than the listing price and one of those was a cash offer. The offer that was ultimately accepted was significantly above the listing price; the buyer was pre-qualified; the offer included no contingencies, not even a home inspection; and, in case the appraisal was less than the amount being offered, the buyer stipulated that he/she would cover a significant amount of any difference.
This house is in good condition, but the final sale price was about the same as that for a larger house also in fine condition down the street that sold last summer when interest rates were about half what they are today.
On my morning walk today, I saw a house on another street with a realtor’s sign denoting it was “Sold”.
My reassessment and tax bill for next year just went up.
Oh, to be a Realtor these days!
Case-Schiller Home Price Index – National
by James C. Sherlock
Housing prices have more than doubled since 2012, reflecting shortages of supply and the resulting speculation. The increasing slope of those curves above is not comforting.
Prices have soared over 20% in a year. Mortgage rates are up. What could possibly happen next? Most can figure that out.
But this article is about the effects on local government property taxes of what most predict will be extreme volatility in the housing market going forward.
How are Virginia real property taxes adjusted to mitigate the effects on both property owner tax bills and government receipts in this boom and very likely bust cycle?
We’ll look at the law. Continue reading →
Posted in Budgets, Finance (government), General Assembly, Governance, Inflation, Infrastructure, Planning, Politics, Recession, Social services, Taxes, Virginia Law
Tagged James Sherlock
by James C. Sherlock
Virginians have only begun to experience price inflation at the grocery store.
Price increases are in the food pipeline that will be a much bigger problem starting this summer.
Farmers and ranchers invest up front. They borrow money to do it. They are incredibly efficient at what they do, but are at the mercy of input prices. They must wait until their crops and animals are sold to recoup their investments.
Everything farmers and ranchers do with their farm machinery requires diesel. So do the trucks that move crops to those who prepare them for our use and then to market. Diesel prices are expected to reach more than $6 per gallon this summer, a 35% increase from current prices. Inventories are low.
Most fertilizer is an oil derivative and has skyrocketed up to 300% since early 2021. On average, fertilizer in March of this year was 35% more expensive than it was in the fall of 2021, with Roundup up nearly 90%. In six months.
Of course, the feed ranchers buy for their animals comes from the produce of America’s farmers.
Producer prices that reflect what they have paid for diesel and fertilizer and the trucking costs of moving those crops are predicted to reach grocery stores in the summer and fall. That hardly suggests that the 9% inflation recently seen in retail food prices is the end of it.
It is important to ask what our governments and our best charities are doing to prepare. Continue reading →
by James C. Sherlock
I now expect both higher inflation and a recession, perhaps a deep one.
The West is at war, whether or not we are prepared for the effects on our federal and state governments.
The bad guys have a lot of natural resources that help keep our economy running. They will cost more and supplies will be constrained. Defense budgets will have to rise. Our governments are waking up to that slowly and too late. We will discover the costs of too late.
The greens should have already discovered the costs of too early on feeling good because a barrel of oil is produced by a dictator rather than in America. The costs of too soon.
The classic way to repay a debt that otherwise cannot be paid back is to inflate the currency at which the debt is denominated. The federal government is extended beyond its ability to borrow and to pay back investors for inflation risk without more inflation. It will cost state and local governments far higher rates to fund new debt.
Virginia is about to spend or refund rather than save money that was generated by the federal activity that raised the debt. Continue reading →