Here are a few unrelated updates and observations for a Monday.
Bedrooms Need Windows
I blogged recently about “What Is A Bedroom” (for appraisal purposes) and several readers responded to remind me that a bedroom needs “egress” to the outside too, which can be a door or a window – but more often a window.
So, a bedroom does NOT need a closet, but it does need (1) its own entrance to the main dwelling; (2) 7-foot ceilings; (3) 70 square feet with no side smaller than 7 feet; and (4) a window big enough to allow someone to get through it.
BRICS Launching Gold-Backed Currency = No Threat to Dollar
In April, when much of the financial press was expressing alarm over the pending collapse of the dollar, I wrote a blog about the topic that actually went viral: The U.S. Dollar’s Going to Collapse & It Will Be Horrific.
That title was largely clickbait, as I illuminated the reasons why the dollar is NOT going anywhere in the near future – no matter what the “BRICS” do. (As a reminder, the BRICS are a consortium of countries that include Brazil, Russia, India, China, and South Africa.)
The reasons the dollar will not collapse soon include (1) the size of the dollar market is so huge that it can’t be replaced; (2) the BRICS are not trusted enough yet; and (3) there is no bond market for BRICS currencies (a reserve currency needs a huge bond market like there is for U.S. Treasuries).
Last week, however, Twitter was lit up again with “dollar-demise-talk” after the BRICS announced the formation of a gold-backed currency.
In response to all of that, Brent Johnson of Dollar Milkshake Theory fame, said this: “The BRICS may very well “introduce”, a “preview”, to a “plan”, to one day “develop”, a joint currency, on Aug 22.
But this “preview” will be a threat to the USD in the same way that Urkel is a threat to Mike Tyson.”
Urkel, for readers who missed the 1990s, was a very frail and nerdy character from the sitcom “Family Matters.” In any case, Johnson’s point is that the dollar world is still far too huge to be threatened in the near term by anything the BRICS do.
Fed Likely to Raise Rates in July after All
Last month I said that the Fed would not raise rates again after the Fed “paused” and skipped a rate increase in June; I cited a 1-minute George Gammon video that pointed out that the Fed stops hiking after a pause 90% of the time.
But many analysts seem all but certain that the Fed will raise rates this month. So, this might be part of the 10% chance that the Fed will raise rates. I doubt though that it will impact long-term (mortgage) rates significantly.
It is interesting too that the Fed seems determined to raise rates still when it is obvious that inflation is falling. The Fed might just want more “ammo” (the ability to reduce rates to stimulate the economy) when the recession hits.
Reddit Bubble Boys Wrong about Housing Crash Again and Again and Again
Here is my favorite random share of the day, and it involves HousingWire’s Logan Mohtashami clowning on the group of housing-naysayers he refers to as “The Reddit Bubble Boys.”
Logan said this on Twitter over the weekend: “Worst housing bubble crash ever? How will the Reddit Bubble Boys explain this one in 2023”
He was responding to this tweet by Lance Lambert, which in part said: “Among the 100 largest markets, only 1 market (Austin) saw a seasonally adjusted month-over-month home price decline in May. The other 99 posted an increase.”
Every reader of my blog knows this, and knows why (tight inventory), but this is still great fodder to share with nervous buyers.
Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
