The Dow hit 30,000 – Wow! Downside volatility continues to seep out of the market in response to ongoing positive vaccine news, cooling political concerns over a peaceful transfer of power, and strong consumer spending. Disruptive technology stocks also have been on a tear, however with nose bleed valuations. The meteoritic rise in U.S. equities should be taken with a grain of salt as the combination of QE forever, and zero interest rates have made equities the only game in town for the moment. Housing has benefited from this surge in the stock market as prospective buyers of homes have seen their 401ks and other accounts increase in value. People buy goods and services when they feel flush.
Let us not forget the economy was humming along prior to this pandemic induced shutdown. The pandemic to date has seen some businesses do much better or think about how their operations could be streamlined (think work from home, less physical office space, new collaborative technologies), while customer-facing businesses have been hit hard. Our lowest-paid employees have seen the biggest loss. Thus, we have the need to provide transfer payments to these employees who want to work but are being told that they are not allowed.
Not too much to say about interest rates, as they very appealing and many borrowers who can qualify for loans are taking advantage of historically low-interest rates. Low-interest rates have fueled a major but unexpected surge in housing. However, there are signs that the market may be cooling off, especially in high-end markets. With such low housing inventory available in desirable markets, there also appears to be a floor under housing price action.
Insigna’s suite of lenders has a deep understanding of borrowers who are either self-employed, wealthy foreign buyers, or real estate investors, and they continue to make common-sense lending decisions on transactions. This is encouraging news given how difficult the lending market was back in March and April of this year.