House Buying Woes

Now that we’re finally all moved into the brand new Daily Peel Global Headquarters, it’s time to tell you all about my personal hell—I mean, experience—in buying a house in 2024. You’re supposed to buy high and sell low, right?                                                                                                                                                                                                                                                                                                                                                                                                                 September 04, 2024 | [Read Online]( Silver banana goes to… In this issue of the peel: - Now that we’re finally all moved into the brand new Daily Peel Global Headquarters, it’s time to tell you all about my personal hell—I mean, experience—in buying a house in 2024. You’re supposed to buy high and sell low, right? - It’s a bad day to have pneumococcal disease, as Vaxcyte’s new vaccine is coming for you. Meanwhile, Morgan Stanley is becoming a big gamer on Unity Software. Finally, Kamala Harris didn’t want anyone to steal our steel, and Nvidia continued to plunge. - With all these contractions, it looks like the manufacturing sector might be expecting something big. Employment growth is so strong they could go into labor any day now—but for now, we’ll just have to wait for the big delivery! Market Snapshot Banana Bits - The DOJ just sent Nvidia a subpoena related to their [ongoing antitrust investigation](. - JPMorgan’s Chief Strategist, Dr. David Kelly, goes deep on the implications of [demographics and debt in the U.S.]( - Certified smarty pants Torsten Slok estimates a 2.2% increase in GDP growth if the [Fed normalizes rates](… and inflation by 1%. - CrowdStrike is getting called to the principal’s office as Congress schedules a hearing related to July’s outage for [later this month](. - Bluesky users surge as [Brazil battles Elon Musk’s X](. The Daily Poll Which of these recent stock market events are you most closely following? [Nvidia's antitrust probe]( [Vaxcyte’s vaccine news]( [Morgan Stanley and Unity]( [U.S. Steel sale controversy]( Previous Poll: How closely are you following the Federal Reserve's upcoming decisions on interest rates? Very closely: 40.3% // Somewhat closely: 41% // Not closely: 10.4% // Not at all: 8.3% Tilt the Odds in Your Favor In the competitive world of high finance, every advantage counts. Our exclusive curriculum, designed by industry experts, sharpens your skills and knowledge, making you a top candidate. Enjoy personalized coaching, targeted internship opportunities, and a robust network of finance professionals with [WSO Academy.]([Â]( Macro Monkey Says Buy High, Sell…? They say to buy low and sell high. I don’t know about you apes, but I’ve never been one to take the easy way. Seeking a true challenge, my girlfriend and I decided, “Let’s buy a house during the worst market since the Global Financial Crisis.” And we did. I’m officially sitting in the new and improved Daily Peel Global Headquarters. As almost half of you indicated plans to buy a home in the next 5-years, I figured I’d give you a rundown of my personal hell, I mean *experience. Let’s get into it. What Happened? Few greater beneficiaries of the pandemic exist than home prices. According to the Redfin Home Price Index (RHPI), our preferred index, the median sale price of all homes across the U.S., increased 46.24% in the 5-years from July 2019 to July 2024. That’s an annualized rate of 7.9%. [Source]( However, assessing your own home search by looking at changes in national indexes is like assessing the New England Patriots by looking at changes in the entire NFL. Regional dynamics run the housing market. And it’s not just about the Northeast vs the South or anything. I’m talking town vs town and even neighborhood vs neighborhood. School districts, population, property taxes, HOA prevalence, local regulations, access to highways, etc., are just some external influences. Internally, any additions, new appliances, yard, shade, neighbors, etc., are all huge influences on price as well. For example, the price of my house increased 47.26% in the last 2-years alone, an annualized rate of 21.35%, nearly triple the national average. So, when people would ask me during our search, “Don’t you think you should wait with prices up so much?” I’d just say it doesn’t matter. Personal needs, like location, family formation, etc., take precedence. The next question we’d get was ubiquitously about interest rates. Thankfully, most people easily understood the concept of “You can always refinance!” [Source]( The week we closed, prevailing 30-year fixed mortgages sat at an average of 6.49%. However, typically, you’ll get your financing effectively closed before the purchase is actually closed. For us, that process took about 3-weeks. So, prevailing rates when we got our financing sat at an average of 6.89%. We bought our house at an eye-gouging, heart-attack-inducing 30-year fixed rate of 7.125%. If we had waited a few weeks, we could’ve easily gotten that under 7% and likely under a nice 6.9%. We have good credit scores, are both 24-years old and paid 6.97% of the home’s value in our downpayment. Already, refinancing estimates indicate we could get a new rate of 6.75%. However, our lender has a “seasoning period,” meaning we cannot refinance for at least 6 months from the purchase. Generally, these range from 6-12 months. JPow could be my personal hero if we cut rates enough. However, refinancing is not as easy as just calling your lender and getting a new rate slapped on there. Changes in the home’s value, credit scores, and a lot more can also impact refinancing decisions. Plus, refinancing carries its own closing costs—not exactly a cash expense we’re eager to incur just yet so that seasoning period isn’t much of a problem for most. The Takeaway? We can get more granular with this stuff, and I’m happy to share more details if you apes want it, but the chart below sums up the home-buying process well. We considered 112 homes, toured 37, made 15 offers at an average of 11.5% over asking (HUGE in the housing market), got 2 accepted offers, and closed on 1 home at 7.5% above asking. To any apes out there looking to buy soon: - DO NOT buy a house for cosmetics—you can paint and redecorate. - Leverage your personal network—we bought a fixer-upper because both my dad and my girlfriend’s dad are in construction. Labor arbitrage at its finest. - Focus on the “unchangeables”—location, yard (property lines), foundation, structure, material, electrical system, HOA, etc. - Start early—similar to college, it's never too early to start looking. Familiarize yourself with the market and process. Your true priorities might shock you. - DO NOT use a friend as your realtor—Everyone became an agent during the pandemic. It (barely) worked out for us, but don’t use a friend in case it turns out they or their lender are actually an idiot in disguise. Best of luck, apes. Let me know if you want more details or shoot me an email if you have any questions: david@wallstreetoasis.com What's Ripe Vaxcyte (PCVX) 36.39% - You know it’s a bad day in markets when I have to resort to a biotech stock here. The big words scare me, but actual smart people are hyped on Vaxcyte. - That’s because the firm reported what Leerink Partners called “stunning” results on their latest study analyzing the firm’s pneumococcal vaccine. - The results threaten Pfizer and Merck’s margins, as they control this sector, with Vaxcyte’s vaccine protecting against 31 strains, while Pfizer’s Prevnar 20 covers only 20 strains. Unity Software (U) 2.02% - “More confident than ever” is exactly how my first boss said he felt after he fired me. It’s also how Morgan Stanley described their view of Unity Software. - Shares dipped 9.1% at open, then fell intraday to settle at 2.02%. MS upgraded shares to Over Weight on the view that Unity is “the clear game engine.” - Basically, that means they think Unity will maintain and grow its position as a popular system for developers to build games on, especially on mobile, PC, and AR/VR. What's Rotten United States Steel Corp. (X) 6.09% - If Democrat nominee Kamala Harris has her way, nobody’s gonna steal our steel. Ironically, American steel manufacturers aren’t very happy about it. - In a Labor Day speech—a day ironically marked by some of us working while others rest—Harris opposed the $14.9bn sale of U.S. Steel. - She did so because she wanted to keep domestic steel production domestic rather than sell it to Japanese buyers, such as Nippon Steel. If she wins, the deal may be dead. Nvidia (NVDA) 9.53% - Nvidia’s earnings have arguably become more important for most companies than their own earnings. If they’re going down, they’re taking everyone with them. - Shares in the stock continued plummeting after last week’s earnings as analysts took the long weekend to ponder the chipmaker’s guidance. - Production delays of the firm’s new chip series, the Blackwell, appear to be the primary detractor. As a result, Nvidia’s elevated valuation is getting hit. Thought Banana Bumpy Manufacturing Given that the U.S. manufacturing sector has posted four consecutive months of contractions and has been in contraction for 21 out of the last 22 months, you’d think a baby was on the way. After all, looking at employment numbers, many in this sector are certainly going into labor. Let’s get into it. What Happened? U.S. manufacturing remained in contraction in August but contracted less than in July. The ISM Manufacturing PMI report, which measures total manufacturing activity, clocked in at 47.2% in August, a 0.4% improvement from July’s 46.8%. Anything below 50% represents contraction in the manufacturing sector, and below 42.5% is generally indicative of an overall economic recession. New orders were the primary detractor in August, falling 2.8% and flashing the most concerning sign. Falling new orders is the most direct signal of weakening demand from intermediary businesses. However, given that inventory levels continue to rise—and rise the most at 5.8% in August—this could be more of an inventory management issue. Prices continued to rise 1.1% along with the backlog of orders, which was up 1.9%, further signaling demand isn’t the problem. Mix in a 2.1% decline in supplier deliveries, and it sounds like inventory and transportation management are the economic problems. Despite the apparent slowdown, employment was booming in August, up 2.6%. Hopefully, many logistics managers are getting added to payrolls so we can figure out if this is a demand or delivery issue next month. The Takeaway? Manufacturing tends to be a leading indicator. We can see this above with the sector’s renaissance starting in the summer of 2020, anticipating the enormous boom in demand we’ve been riding the last few years. Although in contraction, manufacturing appears to be moving in a direction that should be good for our portfolios. After all, that’s all that really matters, right? The Big Question: Is manufacturing indicating an upcoming recession? Is demand or delivery a bigger issue for the sector? Banana Brain Teaser Previous Of the total amount that Jill spent on a shopping trip, excluding taxes, she spent 50% on clothing, 20% on food, and 30% on other items. If Jill paid a 4% tax on the clothing, no tax on the food, and an 8% tax on all other items, then the total tax that she paid was what percent of the total amount that she spent, excluding taxes? Answer: 4.4% Today Andrew started saving at the beginning of the year and had saved $240 by the end of the year. He continued to save and, by the end of 2 years, had saved a total of $540. What is the closest percent increase in the amount Andrew saved during the second year compared to the amount he saved during the first year? Send your guesses to vyomesh@wallstreetoasis.com ❝ Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas. Paul Samuelson How Would You Rate Today's Peel? [All the bananas]( [Meh]( [Rotten AF]( Happy Investing, David, Vyom, Ankit & Patrick Share The Peel You currently have 0 referrals, only 1 away from receiving Free Month of Access to WSO Company Database. [Free Month of Access to WSO Company Database]( [Click to Share]( Or copy and paste this link to others: [ [ADVERTISE]( // [WSO ALPHA]( // [ACADEMY]( // [COURSES]( // [LEGAL]( [fb]( [tw]( [ig]( [yt]( [tk]( [in]( Update your email preferences or unsubscribe [here]( © 2024 The Peel 14435 Big Basin Way PBN 444 Saratoga, CA 95070, United States of America [Terms of Service](