Last week we had two good personal data points concerning housing which set us in motion for additional research.
With residences being one of the larger assets for many, a downturn in prices i.e. 07-09 … caused pause for much of the consumer due to a drop in asset value, creating a negative feed back loop, thereby lowering confidence and spending.
Things may look different this time.
Initial Data Points On Housing/Residence
The jury is still out on all of this, and we would think commercial i.e. Office Properties, raw land, and other similar assets may see negative pressure initially coming from our current situation and the easy pivot to Virtual ….
However a silent winner, or at least a stabilization of value may be residential. It makes sense as there are usually winners and losers when change occurs.
With two noted sales last week, we set out for more information on what may be occurring.
The MBA Purchase index, (includes all purchase mortgage applications) has bounced back strongly and is back to about 90% of the original tracking high, set just a few months ago. Hat Tip RB, for bringing this to our attention, we were very surprised!
Here is a good chart, which is copyright protected, as such, not included in this post.
Mortgage Rates Lower – Included in the nice bounce back of the Purchasing Index above, are the following updated lower Mortgage rates … a second positive to go with the consumer and residence real estate.
While this lowered mortgage rates took time to develop (blip in chart), due to a dash for cash and a wave of refinance, along with underwriters concerns of consumer credit health, due to heightened unemployment, it does appear lower rates may be adding wind to the sails of residential market.
Consumer Confidence – One of the most widely followed confidence indexes, the University of Michigan Sentiment index last week released their latest results, and found surprisingly the index jumped higher than expected, mostly based on current situations, likely associated with the light at the end of the tunnel of openings.
Here is a chart from last month, again copyright restricts last weeks results, but this index bounced back to almost 74 last week…again surprisingly.
Certainly headed in the correct direction.
So a hot New Homes Mortgage Purchasing Index, along with lower Mortgage rates and a happier than expected consumer may lead to additional good news for the economy, spending, asset prices, and an eventual return to a more normal!
It’s early, and things could change quickly, but the initial bread crumbs look VERY positive!
Have a Great “Positive Consumer” Day!
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
May 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale
Hello and Welcome to our May 2020 Financial Planning and Capital Market Update!
If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!
Newbies –
We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
Hope you enjoy!
May – 2020 Video (YouTube)
Financial Planning Tip –
Mortgage Rates
Looking at the chart of the 10 year treasury, we can see rates have finally settled and we are hearing the volume of lenders overflow has calmed as well. While the 10 year is not an exact predictor of Mortgage Rates it is loosely correlated.
Now may be a good time to check your Mortgage Rate and consider refinancing!
Here is one of our favorite and most popular posts on the items to remember when you are getting a mortgage and especially when you refinance.
The Virtual Pivot
In true making Lemonade from Lemons fashion, not only have we been able to access the John Mauldin event, with over forty hours of speakers, but a National CFA(Chartered Financial Analyst) event and several others were completed virtually.
Looking forward to sharing…. tons if info!!
Capital Market Comments – They Came Out!
The Look Through Continues
With current earnings being less than stellar, you may ask why the markets are clawing their way back?
It does appear investors are looking through the valley and attempting to price in what a recovery may look like.
The Tuesday after Memorial Day offered multiple openings across the country…. Wall Street wiped its brow as people came out!
Expect bumps, and headline shocks, both positive and negative … but that’s why we are happily conservative investors at heart!
Have a Great Day – Talk to you at the end of June!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
street-cents
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Posted in Debt - Debt Management, Economy, Interest Rates, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Video
Tagged Capital Markets, CFA, Chartered Financial Analyst, John Mauldin, Mortgage Rates, Refinancing, Virtual Pivot