Finding Home and 2022

Travis

Kaitlin and I have a way of keeping things interesting.

As early as mid-December 2021 we had convinced ourselves that we had come to terms with the idea that we would be lifelong Michiganders. The financial stresses of trying to make the move to California had gotten to me long before that date. I had been unraveling. And while Kaitlin was doing her best to convince me that she could truly be happy in Troy, and while I largely believed her, I knew she’d be far happier in California.

But fast forward two weeks toward the end of 2021 and everything changed. I sat in the chair I’m currently sitting in as I type this, my mind racing, knowing what we had to do. It’s all Kaitlin and I could talk about as we visited her family here in SoCal for a month, the first visit since COVID. As we walked Pippa each day, we schemed.

How much could we afford? By when? What’s on the market? What would this plan look like? Could we live with her folks while we house hunted?

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Higher for Longer and Rocket Incentives

Travis

If you were unaware that CPI came in higher than expected today, most of the world envies you. Nearly everyone was subscribing to the narrative that it would come in LOWER than expected because gas prices have come down from unaffordable to slightly less unaffordable.

The masses were disappointed, caught off guard, and the we know this because the markets had one their worst days in history. The “Fed pivot” is now delayed but still largely expected it seems. That’s dangerous and will keep things messy for longer.

An acquaintance friend guy I know that owns a house near one of my houses and also does AirBnb —let’s call him a friend — called me today to complain about the incompetence of his loan officer at Rocket Mortgage. My FRIEND is pulling a HELOC so he can use it to fund the purchase of a rental property and the loan officer is dropping the ball claiming DTI issues.

I digress.

Two interesting tidbits… the rate on his HELOC is 9.5% — WOWZA!

That was literally the word out of my mouth. He simply said, “Yeah… that’s where the market is at though”.

I think maybe he was talking about credit card balance interest rates (he wasn’t) but I didn’t ask.

His new 30-year rate is supposedly just 5.25% which seems low to me in this environment and about 50 basis points lower than I paid a couple months ago.

But the other interesting thing he mentioned was that Quicken Loans (owners of Rocket) have a 3-year rate guarantee. If rates drop below your interest rate in the next 3 years they’ll give you the lower rate at no cost to you, the borrower.

Again, I think I said “WOW!” and my friend replied with, “Yeah because you know rates will be dropping before that”. I told him I wasn’t so sure.

Beyond being curious about how that is all finagled behind the scenes I found it fascinating for a couple reasons.

For starters, Rocket is now essentially offering incentives for new loans. Make no mistake, this is a perk/incentive/bribe to drum up more interest for folks that are on the fence. They’re trying to drum up demand. You didn’t see these sorts of incentives six months ago.

Beyond that, I wonder if Quicken Loans believes rates will stay elevated for longer than everyone expects.

Think about it. If rates were to go up another 1-2% over the course of the next 12 months, plateau, and then start coming down, we could easily be outside the 3-year window with rates never hitting today’s levels. In that scenario Rocket offered an incentive they never had to make good on.

I assure you this incentive wasn’t made off-the-cuff. There was likely a great deal of analysis, revenue projections, etc. that went into it. A guarantee is never put in place in an effort to cost the guarantor money.

Maybe I’m overanalyzing it but I do believe my friend has a lessor chance of being right than wrong in his assumption that rates will be lower in 3 years.

Ryder Turns Four

Travis

Ryder, yesterday we had a Batman themed birthday party, at your request, to celebrate you turning four. You were in heaven, and I’m sitting here still trying to process how it’s possible that you’re just NOW turning four. It seems like you should have reached this milestone 18 months ago.

Your mom will say you’re “advanced” for your age. I don’t like the connotation or social pressures that word comes with, but you clearly are beyond your years. You process concepts, ideas, really everything far better than any kids I’ve seen your age. You articulate how you feel, think, etc. incredibly well. And then of course you’re big for your age too.

It comes in handy. We’ve been lying about your age for junior ninja class for the last two or three months since their required minimum is four years old. And you understand enough to know to play along when there. You are THRILLED to be going to ninja class now and it’s been great for you.

You generally shy away from physical activity unless it’s wrestling. You don’t like to walk long distances or do anything that resembles exercise. You’d prefer lounging and enjoying some snacks. But you seem to be turning a corner on that and we’re doing long walks to the park (and back) with increasingly less resistance on your part.

You are a handful. And that’s putting it lightly. You are non-stop energy, always wanting to do something, demanding attention. You never stop talking and you have one volume – extra loud! You’re constantly inventing “games” we all have to partake in. They often include some variation of me holding you horizontally and chasing your brother around the yard. Just about every game has some sort of chasing element.

You don’t take no for an answer. Like ever. Your mom is better at denying your insane requests but you’ve had me wrapped around your finger for at least the last six months, oftentimes busting out the irresistible “cute face”. I can’t help saying yes to you. Maybe it’s because you’re just too damn cute, or perhaps I’m trying to make up for the first 12-18 months where we weren’t super connected. I don’t know, but I’m enjoying it.

You love HARD. Bear hugs, big kisses, and snuggles are non-stop. I am taking them all because I don’t know how long they will last. I carry you upstairs, upon your request, every night for bedtime. I love that too. On my nights to put you down I sing your songs, hang out for a bit, and then give you a kiss goodnight when you, like clockwork, ask for “just one more minute”. You turn toward me, jam your face into mine, and throw that big chunky arm across the side of my face. There’s nothing more pure and sweet than those couple minutes we spend like that.

You LOVE your brother and look up to him a great deal. You need his approval on nearly every decision you make. You’ve gotten a lot better with him this year. Before, you were too aggressive and physical which pushed him away most times. But you’ve learned how to temper that a bit and you two are jiving much better these days. It will only continue to improve, I hope.

You know how to command a room. Your mom and I agree you could talk anyone into just about anything. I’m so curious where that’s going to lead you. Your energy is contagious. Thank you for being you, big guy. I love you so damn much. Happy 4!

Stock Pot Boil

Travis

All I keep hearing about is when the market is going to bottom. People seem obsessed with it. Every day I’m seeing more tweets, emails, etc. showing comparisons to previous market cycles, a sentiment indicator, anything really that points to how the market might soon be just maybe trying to put in or perhaps find a bottom somewhat possibly soon hopefully (ridiculousness intentional).

They have a staying for this kind of obsession: a watched pot never boils. With so many eyes obsessing over the stock market bottoming, do we really expect it to boil?

If there’s one thing I’ve become acutely aware of as I approach mid-life it’s that the masses are almost always wrong. This can come in several forms from people flat out telling you you’re wrong about something to too many eyes focused on the same thing.

My guess is the market bottoms when people stop trying to guess it will bottom.

What Are You Buying?

Travis

That’s what I keep hearing from friends in online chat groups, twitter, etc.

Everyone is looking to buy… something. Anything, really.

“DCA!!!” Is the new mantra (dollar cost averaging for those not up on their acronyms) for degens that are now pretending to be long-term investors.

It will work out for some but not most.

The vast majority will run out of money to DCA with long before we reach the bottom. Then they’ll grow so bored of sideways price action they’ll figure either the markets are never coming back or they’ll have what they deem to be a better use for the money and sell.

I don’t know where the bottom is. It’s not a price target. It’s not a date on the calendar. I’m giving some thought to when a bottom might form but I’d rather wait for the market to tell me.

The first thing that needs to happen is asset prices to stop falling. We’re not there yet.

And of course, there will be bounces.

Inflation Nation

Travis

The last time I wrote about inflation was back in August 2021. Lumber had puked from ~$1,700 down to ~$470 only to later rally back to the $1,300’s by January and then fell again into the $500’s where we find ourselves today.

Now it’s oil’s turn. And if you didn’t know that, well, I don’t know how you can miss the barrage of memes thrown in your face all across social media.

And rates, of course… rates are on a tear. Here’s a look at the US 10-year treasury note:

Yes, we’ve seen these levels before. We were here in 2013 and 2018 in fact. But it doesn’t feel like this move is over and that has me thinking a lot about what’s to come.

When it comes to growth stocks and crypto I think we see continued pain followed by grueling sideways action. I doubt crypto sees new all-time highs for 18 – 24 months. It will be painful for many.

I’m not smart enough to know what it means for housing. Supply is still extremely low and, while demand is there, buyers seem to be picky, favoring fully renovated houses over their dated peers. Can you blame them? Tradespeople are in shorter supply than houses. Trying to find, vet, and schedule a good one is near impossible.

And if interest rates keep ripping higher you’d think it would decrease people’s willingness to move. It’s hard giving up that 3% fixed rate for 5%+ right now.

At the same time people are tired of living in fear. We did that plenty during COVID. And I get the vibe that there’s a feeling of “Damn the torpedoes!!” and people are just going to do what they want because the memory of not being able to is still extremely fresh.

Maybe that’s the real danger.

Tucker Turns Six

Travis

Tucker, how are you already six?!

When I think back on this past year my best memories are when we have some time alone. Usually these are just short trips to the store where we can talk in the car. I realize how mature and “with it” you’re becoming. You’re understanding more complex concepts and I can explain things to you and really feel like you’re grasping them. It’s nice.

Unfortunately, I’ve been bad about getting you one-on-one. It’s doubly tough when you have a little brother that is obsessed with you. I’ll make more of an effort this year to do our own thing.

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The Most Obvious Pattern

Travis

I frequently talk about herd mentality.

We want to take notice when everyone is thinking, saying, doing the same thing because there’s outsized potential value unlocks to doing the opposite.

The same can be applied to things that seem incredibly obvious. Often times they don’t play out the way the masses expect. Here is a perfect example I’ve been keeping my eye on lately, a symmetrical triangle that’s formed in Ethereum:

I had been watching this develop for awhile, and I thought I was on to something.

Then I noticed others take note of it. Then I noticed what seemed like EVERYONE take note of it. Then it seemed like the only thing people were watching.

That set off alarm bells.

The assumption with a pattern like this is that, once it breaks one way or another, price will trend in that direction for a good while. Obviously, bulls were rejoicing when it broke higher out of this pattern.

But I’m not so sure. It just seems too easy. I would not be surprised if we see a whipsaw back in the opposite direction (lower here) to throw the masses for a complete loop.

The Superficial Charm of San Miguel de Allende

Travis

After a couple nights in Mexico City Kaitlin and I headed off on the 3.5 hour journey to San Miguel de Allende. I had created a scene in my head of what this town would be like. Quaint, quiet, authentic and beautiful were the adjectives that dominated my vision.

But as we neared the town, I knew I was wrong. Billboards started popping up for real estate in San Miguel, things to do, etc. My hopes of landing in something similar to the dilapidated (but charming) towns we’d passed along the way were crushed.

Here are some photos from the couple days we were in San Miguel:

  • The entrance to our hotel.
  • The first place we grabbed food.
  • Vegan tacos were easier to find here than Mexico City. And incredible!
  • The church in town square.
  • We love finding the local markets.
  • Some shopping…
  • And relaxing at the hotel pool.
  • I took this for one of our employees, a huge Eagles fan.

I tried to find the words to describe San Miguel while we were there. I compared it to Venice in the sense that it feels like it still has that old world charm but it’s simply been overrun with tourism and lacks any real authenticity below the surface.

San Miguel was definitely touristy but I’d say 80% of the tourists were Mexico natives with the rest being Americans, English, and European.

There really wasn’t much to do there. We walked and saw the town a lot but ultimately it’s dining, shopping, and going out at night. There are some vineyards and hot springs in the area, but we didn’t make it to either. We simply explored and hung out for the two short days we were there.

I don’t see myself likely to go back. I much prefer areas that don’t feel so touristy and where I’m unlikely to see other Americans 🙂

Finding vegan-friendly food was definitely easier in San Miguel than in Mexico City. And while finding someone that speaks English wasn’t exactly common, it wasn’t tough to find establishments that had staff that were fluent.

Ultimately, I can see the appeal of San Miguel but I’d like something more off the beaten path.

Vegano en Mexico City

Travis

Kaitlin and I left for our first vacation since Tucker was born, six years ago, on the 30th. I’m currently writing from the airport in Mexico City, waiting to board our (new) flight. We missed our initial (oof).

The trip was initially planned around Kaitlin’s friend that was getting married in San Miguel de Allende. The wedding was cancelled for what seems to be same family issues about traveling to Mexico, COVID, yada yada. I hear the nuptials took place in the states in a more intimate setting.

But we were going regardless. Six years is a long time to wait for a solo vacation free from kids. And my mom was coming up from Florida to watch the mongrels for five days (thanks, Mom!!!).

Life has been busy, so beyond hotels and a car rental we’d done absolutely zero research or planning for the trip. It didn’t matter really but there were some things that caught us off guard.

The big one was finding vegan friendly eats in Mexico City. Usually Mexican food is easy for us. Rice, beans, veggies… no problem. Apparently veggies aren’t prolific here and rice and beans don’t seem to be the staple Americans assume they are in Mexico.

The other surprise was the language barrier. Very few people spoke much, if any, English. Luckily Kaitlin has a great memory and was able to tap into some 10 years of middle school and high school Spanish classes that she didn’t pay much attention in. It was enough to get us by along with us picking up a few things here and there and leaning on Google translate when absolutely necessary.

Combine the lack of vegan options and the language barrier and finding suitable food was tough. But when we did it was fantastic. Definitely some of the best Mexican food we’ve ever had.

After two days in Mexico City we drove 3.5 hours across the countryside in our (manual transmission) rental car to San Miguel de Allende for two more days before heading back to Mexico City for our last night. I’ll write about San Miguel tomorrow. It was an interesting town but ultimately not for me.

We’ve been in the airport for about seven hours now. Our flight leaves in another two. Apparently, if you don’t check in at least an hour before your flight here it is “closed”.

That was fun.

So instead of going through Atlanta and then home to Detroit by 10:30pm today we’ll be flying to JFK, having to get our butts to the Newark airport, and then taking the 6am flight to Detroit to arrive home tomorrow morning around 7:30am.

Then we need to scramble and get to a loan closing for our latest rental by 11am.

Life is nuts.