V-shaped-recovery

It’s Just the Facts: June 2021

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  1. REAL ESTATE – The 2020 pandemic caused thousands of home sellers to pull their homes off the market, fearful of strangers entering their homes during the crisis.  In March 2020 at the start of the pandemic, 1.49 million existing homes were on the market for sale.  By March 2021, just 1.05 million homes were on the market.  With a smaller supply, home prices soared.  The median sales price of existing homes sold rose from $280,700 in March 2020 to $350,300 in May 2021, an increase of +25% in 14 months (source: Nat’l Association of Realtors).
  2. STOCKS – In the last 30 years, the best 12-month performance for the S&P 500 occurred over the 1-year period that ended 3/31/21.  The S&P 500 gained +56.4% (total return) from 3/31/20 to 3/31/21.  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).
  3. BIT OF A LAG TIME – The USA has officially been in a recession since February 2020.  The next most recent US recession ran for 18 months from December 2007 to June 2009. The official declaration that the 2007-2009 recession had ended was made on 9/20/10 or nearly 15 months after the recession’s official end date (source: National Bureau of Economic Research).
  4.  FEWER CHOICES – There were 1.16 million existing homes for sale nationwide as of 4/30/21.  The 1.03 million “for sales” as of 2/28/21 was the lowest level ever reported for a statistic that has been tracked since 1999 (source: National Association of Realtors).
  5. NOW WHAT HAPPENS? – The renter eviction moratorium originally issued by the Centers for Disease Control and Prevention (CDC) on 9/04/20 will expire in 9 days on 6/30/21 unless extended to a later date (source: CDC).
  6. ASKED TO LEAVE – US landlords of rental properties file an average of 3.7 million eviction notices against renter households in a calendar year (source: The Eviction Lab at Princeton University)
  7. BONDS AND HIGHER INTEREST RATES – The worst year for the taxable bond market in the last 45 years (1976-2020) was a loss of 2.92% (total return) in 1994.  The YTD performance (through last Thursday 6/10/21) of the taxable bond market is a loss of 1.65% (total return).  The Bloomberg Barclays US Aggregate Bond Index (created in 1986 with backdated history calculated to 1976), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement (source: Bloomberg Barclays).
  8. BIG INFLATION – The Consumer Price Index (CPI) was up +5.0% on a trailing 12-month basis as of 5/31/21.  Year-over-year inflation was less than +5.0% at the end of 99% of months in the last 30 years, i.e., 357 of 360 months (source: Department of Labor).
  9. DON’T FORGET – State laws require financial institutions to report “abandoned and unclaimed” personal property (e.g., pre-tax retirement account) to the state where the account is domiciled, typically 3-5 years after the account is deemed to be “unclaimed” (source: Uniform Unclaimed Property Act)
  10. THAT’S NOT HOW IT WORKS – If the total net worth of all Americans ($136.9 trillion as of 3/31/21) was evenly divided among all households in the nation (125.9 million households as of 3/31/21), then every household in the United States would have been worth $1.1 million as of 3/31/21 (source: Federal Reserve).
  11.  INVESTING AT A RECORD HIGH – The S&P 500 has set 180 all-time record closing highs in the last 5 years, i.e., since 6/07/16, an average of 3 record closes per month (source: BTN Research).
  12. BRAND NEW HOMES – The median sales price of new homes sold in the United States in March 2021 was $372,400, an all-time nominal record, i.e., non-inflation adjusted.  The average sales price of new homes sold in March 2021 was $435,400, also an all-time nominal record.  The peak in both measurements (median price and average price) on an inflation-adjusted basis was set 4 years ago in May 2017 (source: Census Bureau).
  13. WORK FROM HOME, START A BUSINESS – Americans filed 4.33 million “new business” applications in 2020, up +24% from 3.49 million filed in 2019, and up +75% from 2.48 million filed in 2010 (source: Census Bureau).
  14. WHERE WE LIVE – Existing home prices in the United States have risen for 39 consecutive quarters through the end of the 1st quarter 2021, i.e., from 6/30/11 through 3/31/21 (source: Federal Housing Finance Agency).
  15. NOT A BIG NUMBER – At its peak, 3.7 million home mortgages (out of 52.4 million mortgages nationwide) had requested and received forbearance protection afforded through the CARES Act that was signed into law by President Donald Trump on 3/27/20.  As of March 2021, that total had fallen to 2.2 million home mortgages still in forbearance, or just 4.2% of all mortgages (source: Federal Reserve Bank of New York).

 

Courtesy of Mortgage Market Guide 

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