I’m not sure what snapped in my mind and stoked me to purchase a new wood pellet grill last month, but I personally led the push to replace our old propane grill with this new-fangled outdoor cooking contraption.
The reason it feels strange is that I’ve had it really good for the past thirty years. I just had to go to work and then was graced with a delicious dinner meal when arriving home. I don’t even have to wash the dishes.
So, I think I have just ruined my sweet culinary gig because now I’ve finally become invested in helping Carrie in the kitchen as our pellet grill sous chef. It was mid-late year resolution, I guess.
Before doing my homework, I knew little about wood-fired pellet grills, but I did know that I was over propane gas grills. For me, controlling the cooking temperature and flare-ups on a propane grill was impossible and the meat invariably came off the grate charred black. Not surprisingly, we didn’t grill that often.
I’m told consuming the charred black stuff on grilled meat is frowned upon by cardiologists. I’ve also read that you’re supposed to clean your propane grill at least every ten years, but I’m quite busy.
Have you seen a wood fired pellet grill up close? First of all, they are not a grill at all but rather an outdoor convection oven and smoker; grilling is a secondary feature. They have an electric auger that pushes pelletized wood pieces into a small firepot and then a fan distributes the heat/smoke evenly over the food. The machine sounds like you’re listening to a bathroom exhaust fan on your patio.
We purchased a (pre-assembled) Traeger and they won me over instantly reading the manual. In the instructions, they listed a six-pack of beer as one of the required assembly tools. That is good company culture.
So, now I’m officially in charge of the meat on our dinner menu. A couple weeks ago, I nervously prepared the inaugural cook - a rib-eye steak. It turned out outrageously good, the best steak I’ve ever prepared - medium-rare with no black crust. Last weekend, I attempted to smoke a turkey breast, but forgot to check the pellet inventory and ran out of wood 95% into the cooking session (beer was involved). Carrie salvaged the bird in the oven and it too turned out delicious, moist with a nice smoky flavor.
Traeger grill “pellet-heads” form a huge nationwide fraternity on social media, offering reams of cooking tips, troubleshooting suggestions and recipes online. I think I’m going to like my new hobby, but I’m already a little concerned about my future body-mass index.
One of the biggest financial stories of the COVID crisis has been the spike in housing prices around the country. There’s growing talk of another housing bubble forming, which is never a welcome term. The housing crash of 2008 doesn’t seem that long ago to already have another bubble forming, but that appears to be the trajectory.
Even in the sleepy Susquehanna Valley, home prices are skyrocketing upward. My associate Shae is now house hunting and has commented how discouraging it is to see listed homes selling immediately for more than the asking price.
While there are multiple factors driving home price inflation, the key one is historically low mortgage rates. The thirty-year mortgage fixed-interest loan rate dropped to as low as 2.5% earlier this year and is still hovering around 3.0% - amazing. When the price of money is this cheap, home affordability jumps, driving home prices higher.
Another factor nationally is the exodus of residents moving out of cities and purchasing larger suburban dwellings to set up a home office to work remotely. A final factor is Boomers seeking to downsize, who are colliding with first-time home buyers and driving up the price of smaller, single-level homes everywhere.
Since 2012, the Cash-Shiller National Home Price index has gained six-percent on average. Rent has only increased two percent over the same period, barely in line with inflation, which has made home ownership relatively more expensive over this period.
It is tempting to peek at your estimated home value on Zillow and conclude your house is performing better than your mutual funds. Please don’t do that.
Home realty has been a poor investment over the long run, barely keeping pace with inflation. And that is before you include the additional capital investment to finish man-cave basements and replace counter tops.
Plus, if mortgage interest rates now sit at basement-level lows, it raises the question about how much more home value appreciation can be wrung out without a meaningful increase in rent inflation.
Furthermore, as we learned in the subprime mortgage debacle, the higher home real estate values climb, the more they can fall when economic conditions change. Think about the mortgage affordability calculation if mortgage rates should rise to normal ranges. If a prospective buyer can’t get a loan approved to finance your negotiated sale price, is it really worth that much?
Another concerning trend is a return of the low-down payment purchase mortgage loan. Many FHA loans are being funded with a nominal 3-5% down payment. That leaves no margin of error for the home buyer and also mandates private mortgage insurance. PMI is a four-letter term to a financial planner. If you have less than 20% equity in your home, PMI becomes an outrageously expensive monthly cash outlay – nearly as much as the mortgage payment in some cases – and should be avoided if at all possible.
The lesson is not to overpay for a home, which is easier to say than do. The reality is home realty is generally not a great long-term investment. It’s sounds un-American, but renting your roof can be the better financial move for now until your income rises and/or we see a housing price correction.
The single-family home rental market is a growing sector and represents an interesting alternative to overpaying for home ownership.
Until next time, be well….Tim