Is this really a good time to buy in DFW area? Or are we just hitting "typical" buying season? (Southlake: for sale, real estate)

[frenzyrider]

Originally Posted by EDS_

Picking a few items that have increased in price does not indicate general price inflation.

Our own Dallas Federal Reserve Bank developed what many believe is the best inflation measure around.

Trimmed Mean PCE Inflation Rate - Dallas Fed

Those few items like gas and food are pretty darn important. Wait for inflation to surge soon... It is economics 101. The more u pump money in the economy, more are the chances of long term inflation.. So in my opinion the surge in inflation is not a question of whether it is a question of when

[synchronicity]

Originally Posted by frenzyrider

Those few items like gas and food are pretty darn important. Wait for inflation to surge soon... It is economics 101. The more u pump money in the economy, more are the chances of long term inflation.. So in my opinion the surge in inflation is not a question of whether it is a question of when

You guys DO realize that Trimmed Mean PCE Inflation rate DOES include gas and food, right? The measure excluding gas and food is only included for comparison. Not to mention that the trimmed mean PCE is actually HIGHER than any of the other measures presented.

EDS was responding to a claim that significant inflation HAS BEEN OCCURRING. Anecdotal observations notwithstanding, it has NOT over the past 1, 6 or 12 months. We COULD see a spike in inflation in the not-too-distant future...or we might not.

All that said, and to address the OP's query, I would be inclined to buy now (assuming one has found a desirable house, etc.) rather than wait six months in the hopes that circumstances will shift in favor of buyers.

[GripeWater]

If you need a home then you need a home. If you've had bought two years ago then you would be ahead but now is still not a bad time, unless you are willing to wait for next crisis.

[MckinneyOwnr]

Originally Posted by synchronicity

EDS was responding to a claim that significant inflation HAS BEEN OCCURRING. Anecdotal observations notwithstanding, it has NOT over the past 1, 6 or 12 months. We COULD see a spike in inflation in the not-too-distant future...or we might not.

For the purposes of this discussion, buying a home, inflation has definitely occurred, so I'm not sure where you are getting your info.

Framing lumber prices hit an 8-year high last week as the US housing and construction sectors rebound | AEIdeas

Copper pricing has been on a tear the past few years as well, though I believe it has declined a bit recently, but analysts are still expecting copper to rise for the year.

Simple fact, building material prices have been going up, directly leading to higher pricing for homes. Whether we are seeing a rise in inflation for all goods is not applicable to this discussion.

[GripeWater]

Building a home now is more expensive than buying a pre existing one, even if you have to change appliances or do little remodeling. If you factor in commute, location, land value and schools then established neighborhoods win hands down. If you are getting a swimming pool with the house then you come way ahead.

[EDS_]

Originally Posted by frenzyrider

Those few items like gas and food are pretty darn important. Wait for inflation to surge soon... It is economics 101. The more u pump money in the economy, more are the chances of long term inflation.. So in my opinion the surge in inflation is not a question of whether it is a question of when

1. Generally speaking gas and food are excluded from CPI only in the very short term measures that the press covers because both, especially gas, are very high beta items in the short term - see the gas price chart below. Counter to what you likely think gas is cheaper now than it was one year ago and two years ago ergo gas prices have deflated not inflated over those time horizons. Gas spiking in price 2.5/3 years ago should not be and is not accounted for in this month's CPI for example. A compounding factor regarding food is that we are stupid enough to convert much corn derived food value potential into fuel.

A). As a note CPI including gas and food are released every month

B). Historical Gas Price Charts - GasBuddy.com


2. I'm not a fan of the .gov per se. However, it's really nuts to claim or imply that the CPI is rigged or faked. Far too many people are involved in the development of the data gathering metrics and the results for this to be possible. For but one group, most every active macro-economist and their related grad students or co-workers peruse CPI and other GPI studies every month.

3. It's entirely possible and maybe even somewhat likely that the general economy will improve slowly enough that we will not see significant general price inflation anytime soon. More importantly and I cannot find a decent chart of this at the moment, however, GDP/Money Supply right now is not far off historical norms. Also, many Federal Reserve activities that some claim pump massive amounts of cash into the money supply are simple asset swaps - twists, QE1, QE2 etc. contrary to conventional wisdom do not increase money supply very much. Most new money is derived through simple borrowing (credit cards, bank loans etc. and regular Fed. open market operations plus RRR (r) at banks etc.).

This is the least technical explanation I could find.

http://pragcap.com/the-exploding-u-s-money-supply-myth


PS - I have a master's degree in econ.

[BigDGeek]

Coming from someone without a master's degree in economics...I don't want to argue with any of the points made here, I'm just going to share my own observations.

Since I came back to the US, I've noticed pretty decent inflation at the grocery store. Some items have gotten to be pretty expensive. Some of that is due to natural disasters and crop failures, and I think a good portion of grocery store inflation is due to the spike in gas prices; of course when gas prices go down, grocery prices do not. So that inflated price due to gas being X amount per gallon becomes the new base, and when gas prices spike again, grocery prices go up again and stay there.

As for the fed, I've been hearing experts of various backgrounds blabbing on NPR for the last several months that interest rates will go up. Well, duh; they will someday. But when? The consensus that I'm hearing points to interest rates going up later this year and almost certainly in 2014. I just pulled the trigger on a refi and locked in a 2.75% interest rate because I am nervous about rates going up and staying there. If the OP needs a mortgage, now is the time IMHO.

Again, I don't claim to be an expert; I haven't taken an econ class since college. I'm just going off what I hear and instinct.

[EDS_]

Originally Posted by MckinneyOwnr

For the purposes of this discussion, buying a home, inflation has definitely occurred, so I'm not sure where you are getting your info.

Framing lumber prices hit an 8-year high last week as the US housing and construction sectors rebound | AEIdeas

Copper pricing has been on a tear the past few years as well, though I believe it has declined a bit recently, but analysts are still expecting copper to rise for the year.

Simple fact, building material prices have been going up, directly leading to higher pricing for homes. Whether we are seeing a rise in inflation for all goods is not applicable to this discussion.

His info is correct. You are arguing a different point.

Building materials going up has a direct impact on new home prices. I'd bet the relationship to existing home inventory is somewhat weak.

[EDS_]

Originally Posted by BigDGeek

Coming from someone without a master's degree in economics...I don't want to argue with any of the points made here, I'm just going to share my own observations.

Since I came back to the US, I've noticed pretty decent inflation at the grocery store. Some items have gotten to be pretty expensive. Some of that is due to natural disasters and crop failures, and I think a good portion of grocery store inflation is due to the spike in gas prices; of course when gas prices go down, grocery prices do not. So that inflated price due to gas being X amount per gallon becomes the new base, and when gas prices spike again, grocery prices go up again and stay there.

As for the fed, I've been hearing experts of various backgrounds blabbing on NPR for the last several months that interest rates will go up. Well, duh; they will someday. But when? The consensus that I'm hearing points to interest rates going up later this year and almost certainly in 2014. I just pulled the trigger on a refi and locked in a 2.75% interest rate because I am nervous about rates going up and staying there. If the OP needs a mortgage, now is the time IMHO.

Again, I don't claim to be an expert; I haven't taken an econ class since college. I'm just going off what I hear and instinct.

That's a good post.

[MckinneyOwnr]

Originally Posted by EDS_

His info is correct. You are arguing a different point.

Building materials going up has a direct impact on new home prices. I'd bet the relationship to existing home inventory is somewhat weak.

No, I am not.

Rakin spelled it out for you why homes prices are increasing, and specifically mentioned the cost of building materials increasing. You responded with a quizzical "Inflation?" like it was not occurring.

You took the thread off tangent by bringing up overall inflation, which is not what Rakin was alluding to in his post.

And for the record, the relationship between new home prices rising due to input costs rising and existing homes is quite strong. How do you think comps are used when buying/selling houses? They will compare sq footage from new and existing homes, making existing home pricing also increase.