United States of America eSeries: Steel prices have tripled 💰

Steel prices have tripled 💰

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Today I learned that Bill and Melinda Gates' enormous house has 24 bathrooms. 24! And only seven bedrooms? I'm going to be thinking about this for years. Let's get into it.

By Allison Morrow

🔥 STEEL IS ON FIRE

Steel stocks are so hot analysts aren't even scared to use the b-word to describe the situation. That's bubble. And it's not going to last long.

WHAT'S HAPPENING
The pandemic brought the American steel industry to its knees last spring, forcing manufacturers to shut down production. But as the recovery got underway, mills were slow to resume production, and that created a massive steel shortage, writes my colleague Matt Egan.

Scarcity and panic are now driving the price of steel to record highs. US benchmark steel is around $1,500 a ton — nearly triple the 20-year average.

Steel stocks are on fire, too. US Steel, which crashed to a record low last March amid bankruptcy fears, has skyrocketed 200% in just 12 months. Nucor has spiked 76% this year alone.

"This is going to be short-lived. It's very appropriate to call this a bubble," said Bank of America analyst Timna Tanners."We expect this will correct — and often when it corrects, it over-corrects."

In other words: When steel supply catches up to demand, it will trigger a painful reversal.

THE UPSHOT

The economic recovery is absolutely good news, but it's also creating a situation where the stuff we need to build other stuff is in very short supply. Steel, lumber, computer chips, chlorine, and even workers are hard to come by. The shortages cause prices to spike, and supply chains that were already messed up get further scrambled. For consumers, the end result often means paying more and waiting longer for the goods you buy.

🔑 WHO GETS THE HOUSE?

News of the Bill and Melinda Gates' divorce ricocheted around the world this week, raising a number of questions such as: What, why? What about the foundation? Is it too soon to ask Melinda to star in a reality TV series with MacKenzie Scott? And, of course, what happens to that ginormous house?

(Answers: We don't know why; they'll continue as co-chairs of their namesake charitable foundation; it is definitely not too soon; and we don't know yet.)

The Gateses' mansion, called Xanadu 2.0, is a stately pleasure-dome indeed. The sprawling 66,000 square-foot complex sits on Lake Washington in the Seattle area, in the same pampered neighborhood as the home of fellow uber-rich person Jeff Bezos. It's estimated to be worth more than $130 million.

Some highlights:

A 20-car garage is built into the hillside.
The 60-foot indoor/outdoor pool has its own underwater music system.
A trampoline room.
A 2,500-square-foot gym.
The bedroom-to-bathroom ratio is confusing: The house has just seven bedrooms but 24 bathrooms. 24!

"The whole house is built out of this beautiful orangey wood," a Microsoft intern who visited wrote in 2007. "The landscaping is just insane."

SO, WHO GETS IT?

It's not clear who'll keep the house in the split, but it seems unlikely Melinda will be fighting for it.

Bill began construction on the property before the couple met. Melinda wasn't thrilled with it at first, and she hired a new architect to redesign it. But years later, she still seemed a little uneasy about the home's size.

"I'm actually really looking forward to the day that Bill and I live in a 1,500-square foot house," she told the New York Times in 2019. "Just to be clear, the house was being built before I came on the scene. But I take responsibility for it."

🏘️ DESPERATE HOUSE BUYERS

And now for real estate news that's a little more, um, real.

The US housing market frenzy isn't slowing down, and buyers are getting increasingly desperate, my colleague Anna Bahney writes.

Right now, about half of all listings are sold in a week, and nearly half go for more than the asking price. Bidding wars are basically the standard in some areas.

LANDING THE HOUSE

So, how do you buy a house in such a hot market?

"Say, 'Seller, we'll give you $100,000 over [asking] price, and we'll give it to you in cash,'" joked Javier Vidana, an agent with My Home Group in Phoenix. "Say those words and you got the house!"

But let's say you (understandably) don't have mountains of cash lying around. All hope isn't lost, experts say. Here are some options:

Expand your search. Buyers who have been shut out repeatedly realize they either need more savings or lower expectations. Consider widening your search area — you may be surprised by the overlooked gems a few miles farther out.
Take risks you can handle. A lot of buyers are opting to waive contingencies such as the inspection or appraisal to make an offer more attractive. You can do that — I can hear my mom, a former Realtor, screaming "no you can't!" right now from a thousand miles away — but be prepared to cover additional expenses. The water heater may look fine, but it will almost certainly break the day you move in. That's just science.
Sweeten the deal. This is controversial. The National Association of Realtors says "love letters" to the seller may run afoul of the Fair Housing Act. Buuuttttt that doesn't mean they don't work. You can also bend on terms of the sale — for example, giving a seller more time to move out.