Mortgage in America

It’s Just The Facts: July 2021

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  1. IT’S DIFFERENT – The Federal Reserve measures inflation using the “Personal Consumption Expenditures” (PCE) price index while the government uses the “Consumer Price Index” (CPI) for the “cost of living adjustment” (COLA) to increase Social Security retirement benefits.  The CPI gives “housing” prices a 42.1% weighting in its calculation, while the PCE gives “housing” just a 22.6% weighting.  The CPI gives “medical care” prices an 8.8% weighting in its calculation, while the PCE gives “medical care” a 22.3% weighting (source: Federal Reserve).
  2. NOT JUST KIDS – 19% of Americans that have outstanding student loan debt from college are over age 50, i.e., 8.7 million borrowers out of 44.7 million total borrowers (source: Federal Reserve Bank of New York).
  3. TO THE HEIRS OR TO CHARITY? – 26% of the $137 trillion net worth held by Americans as of 3/31/21 is owned by US citizens at least age 70, i.e., $35 trillion (source: Federal Reserve).
  4. THEY MUST NOT BE TOO WORRIED – 3.99 million Americans quit their jobs in April 2021, the largest monthly “quit level” recorded in US history (source: Department of Labor).
  5. READY FOR A CHANGE – 24% of 2,000 American workers surveyed in late May 2021 are planning on looking for a new job in the post-pandemic world (source: Prudential’s Pulse of the American Worker Survey).
  6. ARE YOU WEALTHY? – The average response from 1,000 Americans surveyed in the first half of 2021 is that it takes a net worth of $1.9 million in order to be considered “wealthy” in the United States today (source: Schwab 2021 Modern Wealth Survey).
  7. HAVE A BETTER IDEA? – 54% of young adults ages 18-24 surveyed in June 2021 have a negative view of capitalism (source: SurveyMonkey).
  8. WHAT’S YOUR HOME DONE? – The average single-family home in the USA has appreciated +15.7% over the 1-year ending 4/30/21, up +7.9% per year over the last 5-years, up +6.4% per year over the last 10-years, and up +4.1% per year over the last 20-years (source: Federal Housing Finance Agency).
  9. MORATORIUM IS ENDING – Banks repossessed just 9,730 homes during the first 6 months of 2021, down from 37,917 bank repossessions completed in the first half of 2020.  Homeowners struggling to pay their mortgages have benefited from the foreclosure moratorium on federally backed homes loans that is in effect until 7/31/21.  No moratorium was in place during the first half of 2010 when banks repossessed 527,906 homes during the global mortgage crisis (source: ATTOM Data Solutions).
  10. ONLY ONCE – Inflation, using the “Consumer Price Index” (CPI) as the measurement, was up +5.4% on a trailing 1-year basis as of 6/30/21.  In the last 30 years, there was only 1 month when trailing 1-year inflation was greater than +5.4%.  Inflation was up +5.6% for the 1-year ending 7/31/08 (source: Department of Labor).
  11. TIME IN THE STOCK MARKET – If you selected any single month at random to invest in the S&P 500 during the 30-years ending 6/30/21, you achieved a positive total return 67% of the time.  If you extend your investment time horizon to just 1 year, you achieved a positive total return 83% of the time.  If your time horizon was 5 years, you achieved a positive total return 84% of the time.  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).
  12. WHERE THE WEALTH IS – The amount of equity American seniors at least age 62 have in their homes has doubled since the end of 2011, rising from $4 trillion as of 12/31/11 to $8 trillion as of 12/31/20 (source: National Reverse Mortgage Lenders Association).
  13. TAKE ADVANTAGE OF LOW RATES – 27% of households with an outstanding mortgage on their primary residence have applied to refinance their mortgage within the last year as of June 2021 (source: Federal Reserve Bank of New York).
  14. NOT AS MANY ON THE MARKET – There were 1.25 million existing homes for sale nationwide in June 2021, 1.54 million existing homes for sale in June 2020 and 1.92 million existing homes for sale in June 2019 (source: National Association of Realtors).
  15. CHEAPER NOW – The median 2-bedroom apartment in San Francisco cost $3,146 per month in March 2020, but has dropped 14% to $2,695 per month as of July 2021 (source: www.apartmentlist.com).

Courtesy of Mortgage Market Guide 

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