Surging Home Prices, Plunging Refis Make For Good Headlines
Tuesday offered an amusing juxtaposition of housing headlines across various media outlets, all vying for the most compelling way to characterize a red-hot market that's poised to cool. The starting point for every story was the nationwide S&P CoreLogic Case-Shiller index, which showed property values rising 11.2% YoY, the largest increase since early 2006 (red line in the figure below). The 20-city gauge, meanwhile, logged an 11.1% gain in January, which was actually a touch below consens
4 thoughts on “Surging Home Prices, Plunging Refis Make For Good Headlines”
Rent is messy, it is lagging home prices, and perhaps it is logical to believe it should go higher, yet at the same time there is forebearance on mortgage and rent payments, which is some kind of collosal number, which to my recollection was around 60bn, but that may not be accurate. Anyone who knows, I would be interested in an updated number. How this shakes out, impact on consumption, lender earnings, credit quality ect is an unknown.
After twenty years in business, my local dry cleaner is shutting its doors on Friday. Everyone is wearing torn jeans to their home office, and the landlord refuses to budge on the rent (which is why 50% of the commercial space in my neighborborhood is empty — a problem that predates the pandemic). The point, as H. notes, is not complicated: the Fed doesn’t have to do anything to cool down the economy or tamp down the “irrational exuberance” we’ve been seeing in various asset classes; the market will do it for them. (Capitalism, go figure.)
Provided the fed let’s the market do it for them but that hasn’t been the case for some time.
It is basic supply and demand. Not being funded with liar loans this time around. American dream is is to pay the bank and not the landlord.