Categories: Family Office, Financial NewsPublished On: June 28th, 2021Comments Off on Market Update – 6/25/202120.4 min read
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After moving sideways for most of the last two months, the S&P 500 and Nasdaq hit a new high this week. Last week we mentioned that investor confidence has not been affected by the Fed’s interest rate hikes message, and funds still flow into high growth or even speculation stocks. We maintain this view in the short term.
The median sales price of existing homes exceeded $350,000 for the first time, an increase of 24% compared to the same period last year and the largest annual increase.
However, high prices also led to a decrease in transaction volume and demand. Based on the average sales price of existing homes, the current housing price to weekly salary ratio hits a new high since late 2000 housing bubble. It takes about 400 weeks of wages (nearly 8 years) to buy a house.
Although low mortgage interest rates lower the overall cost of owning a house, high prices still have a certain impact on future housing demand. At the same time, the housing market’s inventory began to warm up. The inventory of new homes has risen from 3.5 months in October last year to 5.1 months, a 12-month high.
According to various information, the current housing market may be overheated. If the housing market cools in the future, not only will it affect real estate prices, but also affect the overall market, especially investor confidence. At present, it appears that most of the investors did not reasonably expect the risk of a cooling down in the housing market.
President Biden and some senators reached a consensus on the infrastructure bill, reducing the amount to $1 trillion with most of the funds coming from the unused funds in the previous rescue plan. Although it is not certain whether it will be approved by Congress, some industrial stocks have resumed their rise.
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