I think it’s safe to say that we are in uncharted waters. Never before has the inventory of homes for sale in the North Fork been this low, nor the average price so high. Today, from Crawford, to Hotchkiss and Paonia there are only five homes for sale priced under $400,000. Say what? Cinco. Just a handful. As I’ve anticipated, this dearth of homes has precipitated a steep drop in sales. The October local market update provided by our MLS showed a 41% decline in the number of homes sold in the North Fork compared to October 2020, and a 38% decrease in the number of new listings, while the median home price rose to just a smidge under $400,000 (a 14% increase). Behind these statistics lies the unfortunate reality that many in our community have been completely priced out of the housing market, including rental properties, and there isn’t an apparent remedy or reason to think the situation will change in the foreseeable future.
Of course, it’s not just happening here. The escalating cost of homes nationally is a primary driver of the rising inflation rate which has garnered much media attention of late. It’s a double-edged sword though because, as most people’s largest investment, it feels good to see the value of our assets appreciate. Economists call it “the wealth effect” when rising asset values boost consumer confidence and spending – spurring economic growth. As something of a lifelong student of economics, informally in the 60’s and 70’s as a kid at the dinner table with dad, formally at CU Boulder in the early 80’s, and casually ever since, I’ve been particularly interested in the current debate about the Biden administration’s ambitious infrastructure and social spending initiatives, and the implications for the federal budget deficit / national debt, interest rates, financial markets, and the economy as a whole. There’s so much heated rhetoric flying around that it’s hard to know who to believe.
The other day I shared my anxieties about these with Craig Wolverton of Four Seasons Investment Advisors, my IRA guy. He was cool as a cucumber about it and said that his comfort comes, in part, from embracing what is known as Modern Monetary Theory (MMT for short), and he gave me a copy of “The Deficit Myth” by Stephanie Kelton. I know, this is supposed to be a column about local real estate, but hang with me here. The premise of MMP is that as the issuer of currency, the federal government can never run out of money. The book draws a stark distinction between the money issuer (the Federal Reserve) and money users. Users, ranging from you and me, to businesses, to state and local governments can, and sometimes do, run out of money. The Federal Reserve can not. I’ll not go farther here, but if you’re at all intrigued by the concept, I encourage you to pick up a copy.
However, the notion that only the Fed, and other sovereign countries, can create money may be in the process of changing thanks to crypto currency (like BitCoin -ed.). While I have little to no understanding of crypto, the very idea of creating money out of thin air, using computers and a lot of electricity is certainly intriguing. And, living in an area that has long prospered through coal mining, I was fascinated to hear that a crypto mine is being developed in Olathe. I hate to spread rumors, but what else are you going to do with them? It’s impossible not to notice the solar array being installed at the “Old LP plant”, and word on the street is that it’s going to be a crypto mine. The Montrose county assessor’s site shows that it sold in May for $2.445 million to CO MINE 1 LANDCO LLC with an address in El Segundo, CA – which is also the address of several utility-scale solar energy companies. With former operations on this site ranging from a polluting, wafer-board manufacturing facility, to a murky coffee distribution warehouse, to a failed hemp processing plant, to a green crypto mine, this property has a history like none other around. How ironic that the new high school mascot, ”The Miners,” is simultaneously a nod to the past and a harbinger of the future.