Saving for a mortgage

It’s Just The Facts: May 2021

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  1. WE DID, HOW ABOUT YOU? – 59% of US households made a “large purchase” during the first 4 months of 2021, i.e., January 2021 through and including April 2021, the highest percentage reported in 5 years.  “Large purchases” include furniture, home repairs and automobiles (source: Federal Reserve Bank of New York).
  2. WILL IT BE SPENT EVENTUALLY? – The personal savings rate in the US in the 1Q 2021 was 21.0%.  The personal savings rate in the US in the 1Q 2001 was 5.0%.  The personal savings rate is defined as “savings” (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce).
  3. BUSINESS DONE ON A CELL PHONE – The US banking industry, employing 2 million workers today, is forecasted to eliminate 10% of that total (200,000) during the upcoming decade.  The reductions will take place in local bank branches and regional call centers (source: Mike Mayo, Wells Fargo Bank Analyst).
  4. PRICE INCREASE – Inflation, using the “Consumer Price Index,” was up +4.2% on a trailing 1-year basis through 4/30/21.  The last calendar year that reported inflation of at least +4.2% was 1990 when inflation advanced +6.1% (source: Department of Labor).
  5. WILL END SOMEDAY – Since the beginning of the pandemic, the government has extended 6 times the moratorium on foreclosures and evictions on federally backed, single-family home mortgages.  The most recent extension, announced on 2/16/21, expires on 6/30/21 (source: Federal Housing Finance Agency).
  6. PENT-UP DEMAND – US consumers purchased $234.4 billion of foreign imports in March 2021, the largest monthly total recorded in US history.  The low point for the purchase of foreign imports during the pandemic was $166.5 billion in May 2020 (source: Department of Commerce).
  7. LOWEST EVER – The nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 55.8 births in 2020, a record low rate for birth data that has been tracked nationally since 1909 or for the last 112 years (source: National Center for Health Statistics).
  8. FEWER KIDS – The United States recorded 3,605,201 births in 2020, the 6th consecutive year the total has declined, and the smallest number recorded nationally since 1979 (source: National Vital Statistics System).
  9. NEW HOMES – 103,700 new single-family homes began construction in the United States in March 2021, the highest monthly total reported nationwide since June 2007 (source: Census Bureau).
  10. BANKS – Through the first 4 months of 2021, no US bank had failed and required a financial bailout from the Federal Deposit Insurance Corporation (FDIC).  There have been less than 10 banks that have failed in each of the last 6 calendar years, i.e., 2015-2020.  389 banks failed over the 3-year period 2009-2011 (source: FDIC).
  11. FEWER PEOPLE AND FEWER TAXPAYERS – Between the 2010 census and the 2020 census, the population of 47 states increased but declined in 3 states West Virginia, Mississippi and Illinois (source: Census Bureau).
  12. TO START IN JULY – 90% of the estimated 50 million households in the United States that have children under the age of 18 qualify (based upon the household’s adjusted gross income) for the expanded Child Tax Credit (CTC) per the “American Rescue Plan Act.”  Beginning 7/01/21, the CTC will pay $300 per month per child under age 6 and $250 per month per child between the ages 6-17.  Additional amounts may be available for full-time college students older than age 18.  Please consult a tax expert for details (source: Tax Policy Center).
  13. WOOD – The average cost of building a new single-family home in the US has increased by +8% in the last year ($24,000) solely because of the rising cost of lumber.  Lumber mills shut down nationwide in 2020 for as long as 4 months, leading to a lumber shortage as homebuilding demand accelerated.  Lumber imports into the USA have been impacted by a beetle plague ravaging Canadian forests (source: National Association of Homebuilders).
  14. DEMAND FOR EXISTING HOMES – The median price of a new single-family home built in the USA in March 2019 was +17% more expensive than the median price of an existing single-family home sold in March 2019.  The median price of a new single-family home built in the USA in March 2021 was just +1% more expensive than the median price of an existing single-family home sold in March 2021 (source: Census Bureau).
  15. MAKE A QUICK DECISION – Existing homes that were sold nationwide in March 2021 were on the market on average of just 18 days (2.5 weeks) before selling (source: National Association of Realtors).
  16. KEEP YOUR DISTANCE – As of March 2021, 4.2 million American workers have stepped away from the workforce because they are afraid of catching the COVID-19 virus at work (source: Department of Labor).

Courtesy of Mortgage Market Guide 

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