29 Apr 2022

It’s Just The Facts: April 2022

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  1. BEHIND THE AVERAGE – The S&P 500 was up +15.6% (total return) over the 1-year ending 3/31/2022, an average monthly gain of +1.22% (total return).  However the index actually fell in 4 of the last 12 months, postings monthly results that ranged from a gain of +7.0% (total return) to a loss of 5.2% (total return).  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
  2. THEY SHOULD BE – 41% of 1,168 American retirees surveyed in June 2021 were “very concerned” or “somewhat concerned” that the value of their retirement accounts might not keep pace with inflation (source: Society of Actuaries Research Institute 2021 Retirement Risk Survey).
  3. THE ORACLE OF OMAHA – The home at 5202 Underwood Avenue in Omaha, NE where Warren Buffett started his first investment partnership in May 1956 goes on the market tomorrow (4/26/2022) for $799,000.  Buffett, the 5th wealthiest person in the world, rented the home for $175 a month in 1956 (source: Omaha World Herald).
  4. DWINDLING SUPPLY – The number of existing homes for sale nationwide at the end of March 2022 was 950,000.  The number of existing homes for sale at the end of March 2017 was 1.8 million.  The number of existing homes for sale at the end of March 2012 was 2.32 million.  The number of existing homes for sale at the end of March 2007 was 3.81 million (source: National Association of Realtors).
  5. TAXES – The average property taxes paid on a single family home in the United States in 2021 was $3,719, equal to 0.9% of the fair market value of the average home nationwide (source: Attom Data Solutions).
  6. HARD TO CATCH UP – A 30-year old who is investing $500 at the beginning of every month in a tax-deferred 401(k) will accumulate $588,032 by age 60 if the funds grow at +7% per year.  If that individual was forced to suspend his/her monthly deferral for just 5 years from ages 35-39, he/she would have to earn +8.8% per year from ages 40-60 to accumulate $588,032 by age 60.  This mathematical calculation ignores the impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment.  Actual results will fluctuate with market conditions and will vary (source: BTN Research).
  7. BIG CHANGE – Inflation, using the “Consumer Price Index” as the measurement, was up +8.5% for the 1-year ending 3/31/2022.  That�s more inflation than the United States experienced over the 4 years of 2017-2020 when the CPI advanced +7.9% over the entire 4 years (source: Department of Labor).
  8. BLAME IT ON INFLATION – 63% of 2,062 American adults surveyed during the first week of April this year rate the condition of the US economy to be “fairly bad” (32%) or “very bad” (31%).  The dominant reason that these individuals were disappointed in the US economy: inflation and the rising cost of goods and services (source: CBS News/YouGov survey).
  9. HOUSING SHORTAGE – The United States is an estimated 3.8 million homes short of the demand that exists in the country for single-family homes (source: Freddie Mac).
  10. WHO WILL BUY THE LAND? – 70% of the ownership of farmland in the United States will change hands during the next 20 years as the current group of farmers and ranchers retire (source: Department of Agriculture).
  11. GET A NEW START – Personal bankruptcies in the United States in 2021, i.e., nonbusiness bankruptcies, totaled 399,269, down 24% from 522,808 personal bankruptcy filings from 2020 (source: United States Courts).
  12. INVERTED YIELD CURVE  About 6.5 months ago (10/01/2021), the yield on the 10-year US Treasury note (1.48%) was 1.21 percentage points higher than the yield on the 2-year US Treasury note (0.27%).  Last Monday (4/04/2022), the yield on the 10-year Treasury note (2.42%) had slipped under that of the yield on the 2-year Treasury note (2.43%).  The last time the yield on the 2-year note exceeded that of the 10-year note was on 8/29/2019, 6 months before a recession began in the USA (source: National Bureau of Economic Research).
  13. COSTS MORE  Since 12/31/2021, the average “principal and interest” (P+I) payment on a 30-year fixed rate mortgage has increased $92/month per $100,000 borrowed.  On 12/31/2021, the nationwide average mortgage rate of 3.11% translated into a monthly “P+I” of $428 per $100,000 borrowed.  On 4/07/2022, the average mortgage rate of 4.72% translated into a monthly “P+I” of $520 per $100,000 borrowed (source: Freddie Mac).
  14. HOME BUILDING 1.13 million single-family homes began construction in 2021, the 10th year of increasing home starts since this measurement bottomed at 431,000 in 2011 (source: Census Bureau).
  15. WHO IS THE BUYER? – Investors, not homebuyers, are behind 33% of the purchases of single-family homes in the United States in today’s market, up 5 percentage points from the 28% of buyers that investors represented over the past decade (source: John Burns Real Estate Consulting).
  16. CAN YOU AFFORD IT NOW? – 24% of 1,168 American retirees surveyed in June 2021 indicated that they had to pay for major home repairs during retirement (source: Society of Actuaries 2021 Retirement Risk Survey).
  17. DOUBLE-DIGITS – The S&P 500 index has appreciated at least +10% (total return) in 19 of the last 30 years (1992-2021), including 8 of the last 10 years (source: BTN Research).
  18. TEN PLUS – The average US single family home has appreciated at least +10% in just 4 of the last 30 years (1992-2021).  The double-digit years were 2004, 2005, 2020 and 2021 (source: Federal Housing Finance Agency)

Courtesy of Mortgage Market Guide 

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