The Real Estate Channel

Winning Is Easy; Governing Is Hard

Donald Trump swept into office on a populist wave. His promise of greater growth for the United States economy resonated with a large part of those disappointed with stagnant wages and a lack of opportunity. He said he would bring manufacturing jobs back and provide better healthcare coverage at a lower cost.

Pending Home Sales Jump in February, Highest in a Year

Today the National Association of Realtors released the February data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales rebounded sharply in February to their highest level in nearly a year and second-highest level in over a decade."

Home Prices Rose 5.9% Year-over-Year in January, 31-Month High (NSA)

With today's release of the January S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-five months. Today's S&P/Case-Shiller National Home Price Index (Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high.

Dissolving Musical Chairs

Over the completion of the current market cycle, we estimate that roughly half of U.S. equity market capitalization - $17 trillion in paper wealth - will simply vanish. Nobody will “get” that wealth. It will simply disappear, like a game of musical chairs where players think they've won by finding chairs as the music stops, and suddenly feel them dissolving as if they had never existed in the first place. Moreover, even if U.S. real and nominal economic growth were to fully recover to their long-term historical norms, it would take 12-16 years of 6% nominal growth, with zero price appreciation in the interim, to bring reliable valuation measures back to their own historical norms.

What Does the Health Care Decision Mean for Stocks?

There is plenty of “upside risk.” Earnings growth is improving, even in the environment of modest growth. The recent market strength could go on for years without any policy changes. If some of the Trump agenda (probably with Democratic support) becomes law, it could mean a spike in both economic growth and profits. We already see improved business and consumer confidence.

Bring On Brexit

The British government is set to invoke Article 50 of the Lisbon Treaty next week, formally signaling its intention to separate from the EU.

February New Home Sales Up 6.1% MoM, Beats Forecast

This morning's release of the February New Home Sales from the Census Bureau came in at 592K, up 6.1% month-over-month from a revised 558K in January. Seasonally adjusted estimates for November and December were also revised. The forecast was for 565K.

Existing-Home Sales Drop in February

This morning's release of the February Existing-Home Sales decreased from the previous month to a seasonally adjusted annual rate of 5.48 million units from 5.69 million in January. The consensus was for 5.57 million. The latest number represents a 3.7% decrease from the previous month and a 5.4% increase year-over-year.

FHFA House Price Index Flat in January

The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for the most recent month. U.S. house prices were mostly unchanged in January, up only 0.04 percent on a seasonally adjusted basis from the previous month. Year-over-year the index is up 5.7% (nonseasonally adjusted).

The Climb

I spent last week climbing the mountains of Idaho and Utah, seeing accounts and doing presentations for our financial advisors and their clients. In my absence, the stock market did some climbing of its own...

What’s the Difference between a TAMP and a Robo?

Are “robos” nothing more than the latest version of TAMPs – turn-key asset management platforms?

America’s New Emphasis on Fiscal Policy

Investor exuberance is being supported by proposed fiscal policy such as lower corporate taxes, deregulation and historically large budget cuts to help finance the rebuilding of the nation’s infrastructure and military.

Secular Trends in Residential Building Permits and Housing Starts

Over the long haul the two series offer a compelling study of trends in residential real estate. Here is an overlay of the two series since the 1959 inception of the Starts data and the Permits data, which began being tracked a year later. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau's mid-month population estimates.

Why Your Clients’ Investments, Not Cash, Make the Best Charitable Gifts

What might a stock holding, a piece of real estate, shares in a privately held company, interests in private equity, venture or hedge funds, and fine art or collectibles have in common? Whether purchased for love or investment purposes, they can help your clients realize the maximum tax benefits from their charitable giving.

New Residential Building Permits: February Down, Below Forecast

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential building permits. The latest reading of 1.213M was a decrease from 1.293M in January and below the forecast of 1.260M. December was revised upward by 8K.