A Letter · May 2025

May 17, 2025 Azari

Will there be a recession? I don't know. Anyone who says they do is lying to you. What I do know is seven out of the last eight recessions, house prices went up.

Why? Rates go down in recessions, and recessions mostly hurt those who can't buy homes in the first place (praise be, John Adams).

Dry powder likes to light upon the flint of low interest rates.

Most folks only look at their rate of interest, which is odd. Because the multiplier, e.g. the rate, affects all the other prices around it. Rates down, prices up. Rates up, prices down... until recently... recently it's rates up + prices up.

Not a great look for ol' Keynes and his brood of PhDs guessing wrong at the FED.

Let's nowcast. Where are we? We are in fear, uncertainty, and doubt.

Trump has grabbed the globe by its globes and is spinning and squeezing so seemingly randomly, everyone is dizzy at best. Most want off the ride; discount at the carnival, chaos creates cash (praise be, Heisenberg).

Meh, there are two outcomes. Recession or not recession. Not recession = inflation out the kazoo. Don't think house prices and interest rates can rise at the same time? Well, the past two years was the trailer to that thriller of a movie. Imagine 30 year mortgage at 10% with house prices soaring.. it's a bet you can make.

In other words, we're not far from all the money the government collects via taxes going to pay for interest alone on the debt; a recession would accelerate this event bigly.

You're already seeing it, the world is dedollarizing (China's stock market is up 22% relative to the US since January). The world is dumping their treasuries and other debt issued by America. That's why gold is going all kinds of vertical. Where do they put those dollars they are selling en masse? Some goes into stocks, crypto, commodities, private equity... but most goes into the largest financial market on earth: Real Estate (valued at 379 Trillion globally)

"God ain't making more land" -nor is the city letting developers build more housing. This ain't Texas, we don't sprawl. This is NYC; between the endless pilates studios and the city's moronic restrictions about development, we keep it tight.

NYC is small, and it has a financial firewall around it called DAS COOP that makes sure our housing market is absurdly solvent. Anyone who has bought a coop can attest to the financial proctology exam they had to endure to get approved. Sucks, sure, but there is a positive to the co-op's Stalinist grip: there are no speculative real estate bubbles here because anyone who can buy in NYC is vetted. If you own in NYC, it's because NYC permitted you the privilege.

NYC in my humble opinion is the single greatest asset class on earth. Solvent, liquid, scarce, and always in high demand.

Even COVID's largest exodus in human history of 550,000 people fleeing the city couldn't make prices or demand dip. Now that's resilient.

What am I talking about? Buy, sell? Don't buy, don't sell? If you want an entity to tell you to push the buy or sell button I suggest following that chicken that trades futures on TikTok, he's killing it. What I am saying is there is always a way to make sound financial choices in any market condition; especially ones full of uncertainty.

The human mind cannot plan past 5 years; we're emotionally incapable of it (sure explains a lot about the state of the world, donit?) But... you're better than human. You're also very attractive. More importantly, you think differently. How do I know? You're still reading this. The dumbdumbs tapped out when I hit them with the quote about sovereign debt bubbles.

And you have me; reminding you the sky is not falling, the chicken is very little, and this too shall pass.

When everyone can see the harbor, there will be nowhere left to moor. Now is the time to act. The data show list prices unchanged year over year but homes closing below their asking price. What does that mean? Sellers are pricing "at market" but accepting less of dem greenbacks to bounce. Deals to be had for those who will bid.

Are you a potential seller? If so this sounds bad. But it's not. Inventory is very tight, so you still have an edge if played correctly. Every buyer knows they can get a deal now. So give them one... list below market and attract the pack of rabid home enthusiasts who all want THE deal. They will bid it over market, they always do once they get competitive.

People lose logic at the Colosseum; especially when they are the ones in the pit. Few get their death and glory moment in life. Bidding on a house is a moment that can summon that bestial exuberance. Let's help them brag at dinner how they won a bidding war on your home. In the end, everyone wants what everyone else wants. We can create want, and in so doing get you a higher price on your home. Marketing is all about emotion.

Odd sales pitch I have, but if you're still reading, you're feeling an emotion. I don't care which one it is tbh. Emotions are how we remember. Logic, we have to struggle to retain. Feelings... they linger.

I'm around, I see tons of amazing deals everyday at every price point. I am the OG-AI.. scanning, learning, I know this market like I know the blood in my heart, and unlike AI, I have taste.

I know how to find people homes who won't pass a coop board. If you make 120k and have 120k in the bank, you can buy a studio in Manhattan. If you want to sell your home but have been waiting, don't. Get out and enjoy your life and shed the anxiety of trying to time something as unpredictable as a child on a sugar high. If you've got millions to spend, now is the time to bully those Chinese panicking into liquidation over fear of political risk.

There is no future, there is only now. The key to this game is how to find the best play for the moment you're in. Don't fixate on fictitious perfection, that mirage miracle in waiting. The carrot gets eaten by the one who dangles it.

Money is worthless, only happiness has value. Let us go make some happiness with these silly expensive things we call homes.

Yrs,
Azari