The markets pulled back in the last 20-30 minutes but I still had a nice mid-level gain in my nine stocks. I will take ANY profit after yesterday. We should now be on track to start a new week......next week....in style.. I also beat the SP500 today by 0.20%.
Another WILD and CRAZY week in the books. DOW year to date +6.06% DOW five days +1.55% SP500 year to date +18.40 SP500 five days +0.76% NASDAQ 100 year to date +22.93% NASDAQ 100 five days (0.34%) NASDAQ year to date +24.60% NASDAQ five days +0.14% RUSSELL year to date +6.73% RUSSELL five days +5.39% Actually a good week and from the above you would never know that yesterday happened if you happen to live under a rock. I had a good week....in the end. I am now year to date for my entire portfolio....+49.45%. Last week I was at +48.16%
I have no doubt that this TRADING ACTION....played a big part in the market ROUT yesterday. Traders piled into bets against small-cap stocks at exactly the wrong time https://www.morningstar.com/news/ma...st-small-cap-stocks-at-exactly-the-wrong-time (BOLD is my opinion OR what I consider important content) "It appears hedge funds and other sophisticated investors piled into bets against small-cap stocks at exactly the wrong time. On Thursday, they paid the price as traders dumped market-leading Big Tech stocks and rotated into small caps, midcaps and interest-rate-sensitive sectors like real estate."........ "According to market strategists and portfolio managers who spoke with MarketWatch, many funds were forced to quickly change course by closing out their bets against small caps as well as their long positions on highflying Big Tech names."....... ".....many funds were forced to quickly change course by closing out their bets against small caps as well as their long positions on highflying Big Tech names."...... MY COMMENT In other words.....a big part of the market craziness yesterday....was a good old fashioned PANIC on the part of Hedge funds and professional traders. So much for the "professional" part of "professional traders". Meantime the LOWLY little retail investors.....and long term investors....just sat and watched the CIRCUS come to town. They were also rewarded today.....as the markets went back to normal.....and the data point that is yesterday is already invisible on most charts.
Another nice end to the week. Looks like small cap lead the way again today, but the green also extended into large cap today. A nice broad green day unlike yesterday.
YEP Smokie....good to see lots of people making money today. I am still waiting to see some of that $6.14TRILLION....yes that is NOT a typo......$6.14TRILLION with a "T"..... that is sitting on the sidelines come into the markets. Probably will not happen till rates go down and the reward for siting in cash drops significantly. If you need SAFETY the rates right now are still attractive.....and....even when they go down you would be well served to continue to be conservative. If you are staying out of the markets based on fear......you have missed out on an EPIC year so far for stock investors. The Cost of Cash: A $6 Trillion Question https://www.pimco.com/us/en/insights/the-cost-of-cash-a-6-trillion-question "There is currently over $6 trillion of cash parked in money market funds (see Figure 1). This is double the average for the past 30 years. "
I will very briefly mention the assassination attempt on President Trump yesterday. There was nothing on TV and we were flipping channels. We had just flipped to Fox News to see what was going on. The Trump rally had just started and we saw the whole thing in real time on TV as it happened. It was obvious from the start what was happening. Prayers and condolences to those that were killed and injured in the event and to their families. Obviously the country just avoided a shocking disaster by a fraction of an inch. No doubt this attempted assination will dominate the media for days and weeks to come. But things will be relatively normal....for the country, the economy, the markets, and the people of the USA going forward since this attempt failed. Anyone that wants to discuss this on here is free to do so....or to post your thoughts. Mine will be muted due to the nature of this thread and forum.
Just a quick note. A few days ago spanish Infanta, princess Leonor, visited Lisbon in her first state visit. She will be next spanish queen after his father, king Felipe de Bourbon. She visited Lisbon Oceanary where usually we can see a huge crowd of local people, as well tourists. An american family from Virgínia, visiting Lisbon Oceanary, was surprised. "Where are the snipers? If this was with Joe Biden roads would be cut and we would see snipers everywhere!" https://cnnportugal.iol.pt/leonor-b...-americanos/20240712/669197f2d34ebf9bbb3fcc5a
To add a bit to the above....People get too wrapped up in politics in todays time. Over a period of time there have been many elections at the various levels of government. There have been policy changes, laws, and all sorts of things that come with it. We have survived them all despite party affiliation. The ebb and flow of these things tend to average out over the long haul. We may not like a particular direction or policy during a time period...and then we go and vote. Our lives continue on and somewhere down the road, we go vote again. The cycle of changes end up being like a pendulum over time. People act like one cycle is a make it or break it type deal...when history tells us this is not true. We are still here, despite the differences we may have. We still have the FREEDOM to choose. We are going to wake up tomorrow and have the FREEDOM to make our own choices as we go about our day. Your choices may be different than mine, but it is no less or greater than our shared ability and right to make it. That is what makes FREEDOM so valuable. And yes, the incident yesterday and the other times this has occurred in our history, is an example of cowards who do not understand the concept and basis of FREEDOM.
I am probably a little more of a CYNIC....than most people. I have never been a politician or worked for one. BUT.....I have known politicians on a fairly high level.....State Governor, Federal Senators and Reps, State AG, reps and senators. I have testified a number of times in state legislature on various business issues. I have also been involved with lobbyists on various business issues. As a result I want nothing to do with any of it...other than voting. People DO get way too wrapped up in it all.......to the point that they are impairing their own lives by spending way too much time worrying about and obsessing over politics. At the same time as......little people.....they are looked down on by many of the political elite on both sides. I consider myself one of the......"little people". After seeing and knowing way too much about the insider process of it all.....I was glad....in 1990..... to move away to a different County and City and not have insider knowledge any more. I simply did not want to know. So I lived in one area and commuted 60-90 minutes to my business.....located in my previous city. Believe me it is nothing like the government class book chapter........"How A Law Is Made". It is like people that are obsessive about working......or.....people that spend every day obsessing over politics, talk radio, and opinion TV.....it is a waste of your life. Not many people are going to wish they had worked more....or....been more involved in politics.....when they are on their death bed. What counts is one thing....FAMILY. That is why we should invest and try to grow our money....to provide for and secure the future for FAMILY. AND....I agree with SMOKIE...it is about FREEDOM. To live your life, to make money, to do whatever you enjoy doing with your time, to care for and provide for your family, to raise your kids, etc, etc. At the same time I see those FREEDOMS slowly being relentlessly chipped away and/or limited and restricted by government and bureaucrats.....bit by bit....day by day by day. Just some random thoughts....mostly......irrelevant to what nearly happened yesterday.
At least since the attempt failed....we can move on in a normal fashion to the new week. Netflix results, retail sales, and a chip update: What to watch this week https://finance.yahoo.com/news/netf...update-what-to-watch-this-week-130036789.html (BOLD is my opinion OR what I consider important content) "The biggest economic event of July has come and gone. For the balance of the month, investors will focus most of their attention on the corporate earnings calendar. Netflix (NFLX) will be the first Big Tech company to report quarterly earnings during the current reporting period, with the streaming giant set to release results after the close on Thursday. And with the AI trade continuing to dominate on Wall Street, investors will pay close attention to results from ASML (ASML) and Taiwan Semiconductor Manufacturing Company (TSM), set for release Wednesday and Thursday, respectively. ASML is the leading manufacturer of lithography machines, which enable companies to actually imprint their designs onto new chips. TSMC is the world's biggest chip manufacturer. Elsewhere on the earnings calendar, reports from Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC) will wrap up results from Wall Street's biggest banks, while Dow members Johnson & Johnson (JNJ), American Express (AXP), UnitedHealth (UNH), and Travelers (TRV) are all expected to report. Politics will also be a top concern for investors after Donald Trump survived an assassination attempt at a rally in Pennsylvania on Saturday. Business leaders were quick to react to the day's events, condemning political violence and praising the former president's "courage under literal fire [Saturday night]." The Republican National Convention is set to be held this week in Milwaukee, which will see Trump formally named the Republican nominee for president. The economic data calendar will be sparse, with Tuesday's retail sales report for June serving as the highlight. After May's results showed a surprise slowdown in spending, investors and Fed watchers will monitor the results for signs of further weakness in the US consumer. The team at Oxford Economics expects retail sales to fall 0.4% in June, though this headline drop will be driven by a decline in gas prices. "We expect a solid 0.3% rise in underlying control group sales, which, with prices declining in June, will translate into a strong rise in real consumption to round out Q2," the firm wrote in a note on Friday. "The consumer is still in solid shape, underpinned by a labor market that is cooling, not collapsing, and the strong state of household balance sheets." Thursday's inflation data turned markets upside down, with everything that had been working (read: "Magnificent Seven" names) coming under pressure and what had been left behind, most notably small caps, surging. Still, Friday's rally sent stocks into the weekend with another weekly gain across the board." MY COMMENT At least.....in terms of money and investing......the focus will be where it should be this week....EARNINGS. There will be much news coverage of the disaster we just avoided....as there should be. Fortunately we can move on in our daily lives....while taking a little time to think about those that were killed or wounded by the assassination attempt.....and to contemplate the shortness.....and randomness..... of the human lifespan and experience.
Regarding my final sentence above........IN MEMORIUM: Shooting Victim’s Daughter Speaks Out: ‘He Truly Loved Us Enough to Take a Real Bullet for Us’ https://www.breitbart.com/politics/...ruly-loved-us-enough-take-real-bullet-for-us/
I have invested through all of the below. NOW....you young investors imagine what is going to happen over the 20-30-40-50 years you will be investing from 2024 forward over your lifetime. The Stock Market Never Changes https://awealthofcommonsense.com/2024/07/stockmarket/ (BOLD is my opinion OR what I consider important content) "Charley Ellis wrote a great book about the index fund revolution back in 2016. One of my favorite parts of the book is where Ellis looks at how Wall Street has changed in the past 50 years: MBAs were uncommon. PhDs were never seen. Commissions still averaged 40 cents a share. All trading was paper based. Messengers with huge black boxes on wheels, filled with stock and bond certificates, scurried from broker to broker trying to complete “good deliveries” of stock and bond certificates. Brokers’ research departments–then usually fewer than 10 people–were expected to search out “small-cap” stocks for the firm’s partners’ personal accounts. One major firm put out a weekly four-page report covering several stocks, but most of the time provided no research for customers. Trading volume of New York Stock Exchange listed stocks increased from 3 million a day to 5 billion, a change in volume of over 1,500 times. The dollar value of trading in derivatives rose from zero to more than the value of the “cash market.” The investors executing this surging volume of trading have changed profoundly. Individual amateur investors did over 90 percent of all New York Stock Exchange (NYSE) trading 50 years ago. They may have read an article in Forbes, Barron’s, Business Week, or a newspaper or taken advice from their busy broker, but they were market outsiders. They were not regular traders. They averaged less than one trade in a year, and almost half their purchases were AT& T common stock, then the most widely owned U.S. stock. Fifty years later, the share of trading by individuals has been overwhelmed by institutional and high-speed machine trading to over 98 percent. Today, the 50 most active (and ruthless) professionals– half of them hedge funds– do 50 percent of all NYSE listed stock trading, and the smallest of these 50 giants spends $100 million annually in fees and commissions buying information services from the global securities industry. These institutions are all market insiders who get the “first call”– and they know what to do with new information. Bloomberg machines, unheard of 50 years ago, now number over 320,000 and spew unlimited market and economic data virtually 24 hours a day. The population of CFAs (Chartered Financial Analysts) has gone from zero 50 years ago to 135,000, with over 200,000 more in the queue studying for the tough annual exams where pass rates are less than 60 percent. Algorithmic trading, computer models, and corps of inventive “quants” (quantitative analysts) were unheard of years ago. Today, they are major market participants. The Internet, e-mail, and blast faxes have created a revolution in global communications: instantaneous, worldwide, and accessible 24/ 7. We really are all in this together. National securities markets, once isolated, are increasingly integrated into one nearly seamless global megamarket operating around the clock and around the world. And this megamarket is increasingly integrating with and transforming bond markets and currency markets as well as the major markets for such commodities as oil, gold, and wheat. Regulations have changed to ensure simultaneous disclosure to all investors of all potentially important investment information. Since 2000 in the United States, the Securities and Exchange Commission’s Regulation FD (Fair Disclosure) has required that any significant corporate information be made simultaneously available to all investors. (Years ago, such information– when proprietary– was central to successful active investing.) Regulation FD is a game “changer” that has effectively commoditized investment information from corporations. Hedge funds, acquisitive corporations, activist investors, and private equity funds have all– with different perspectives and different objectives– become major participants in price discovery in today’s securities markets, now the world’s largest and most active prediction market. The way markets used to function would be unrecognizable for today’s participants. In the past 50 years we’ve witnessed the development of index funds, ETFs, 401ks, IRAs, online trading, zero commission trading, targetdate funds, automated investing, direct indexing, high-frequency traders, message boards and more. Plus, we have much more knowledge about the market than people did in the past. The stock market is very different in so many ways. In other ways, the stock market never really changes. Here’s a look at the rolling standard deviation of 30-day returns on the S&P 500 since 1928: This is a good proxy for the VIX, which is essentially a measure of volatility in the stock market. Market structure, liquidity and costs may have changed but volatility is the constant. You can see the huge spikes during a crisis — the Great Depression, the 1987 crash, the Great Financial Crisis, the Covid crash — all look fairly similar. There have also been periods of relative calm (like now) throughout the market’s history, with the occasional volatility spike during a correction. Volatility looks the same across history because human nature is the one constant in the stock market that will never change. You can’t get rid of fear, greed, panic, euphoria, anxiety or FOMO. Jesse Livermore said it best roughly 100 years ago: “Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.” Everything around the stock market can change, but the stock market itself can never change because human emotions don’t change." MY COMMENT The changes over the last 50 years have been massive in business and investing. I have lived though all of them. I hope there are still markets to invest in 50 years from now.
Guess what the market ELITES dont like? Column: Investing through index funds is more popular than ever, so why is it becoming controversial? https://www.latimes.com/business/st...pular-than-ever-so-why-is-it-so-controversial
A relief rally today. Due to the assassination failure. Dow rises to record after Trump survives assassination attempt: Live updates https://www.cnbc.com/2024/07/14/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "Stocks advanced on Monday as investors evaluated the impact of the assassination attempt on former President Donald Trump and geared up for a big week of corporate earnings. The Dow Jones Industrial Average jumped 183 points, or 0.5%, and notched a new intraday record high shortly after the opening bell. The S&P 500 gained 0.5%. The Nasdaq Composite popped 0.7%, aided by a nearly 2% rally in Apple following an upgrade on Wall Street. Traders were monitoring the latest developments with the attempted assassination of Trump, the Republican candidate for president. While it had potential to create more political strife in the country, investors also speculated this could further propel Trump and Republicans in the polls ahead of the November election. “The good news is that former President Trump was not injured more than the ear, that he was not killed,” said Sam Stovall, chief investment strategist at CFRA Research, on CNBC’s “Worldwide Exchange.” “As a result, I think the market will continue on its momentum ways.” The Republican National Convention commences Monday in Milwaukee, Wisconsin, with Trump leading President Joe Biden in national polls. Insurers Humana and UnitedHealth Group, which could benefit from less cost pressures coming from a Republican administration, rose in the session. The Russell 2000 gained for a fourth straight day, aided on Monday after Goldman Sachs said a second Trump term could help small caps outperform. “Trump was already the clear frontrunner, and the shooting will only cement that status,” Adam Crisafulli, founder of Vital Knowledge, said in a note on Sunday. Elsewhere, investor attention is centering on second-quarter earnings reports. These releases could provide the latest catalyst for a market that has rallied to new highs this year. Goldman Sachs shares rose after posting earnings that exceeded analyst expectations. It’s one of the more than 40 S&P 500 companies reporting second-quarter earnings this week, a list that also includes household names such as Bank of America, United Airlines and Netflix. Investors will also follow remarks from Federal Reserve Chair Jerome Powell at the Economic Club of Washington, D.C. at 12:30 p.m. ET." MY COMMENT Looking forward to a good day today in the markets. Also looking forward to a good week for the markets based on.....EARNINGS.
Good news for those of us that own APPLE. Remember it was just a week or two ago that all the coverage of this company was negative. LOL. Apple Hits Record High Again After Being Named Top Pick at Morgan Stanley https://finance.yahoo.com/news/apple-top-pick-morgan-stanley-110127237.html MY COMMENT Lots of good info in this little article including this: "Apple’s annual sales in India hit a record of nearly $8 billion, Bloomberg News reported Monday, underscoring a rapidly growing market where the iPhone maker now assembles more of its devices and operates two flagship stores." Here is the thesis for the article and the discussion. "Analyst Erik Woodring boosted his price target on the tech giant’s shares to $273, the third-highest among analysts tracked by Bloomberg, saying Apple Intelligence has potential to drive a record number of device upgrades. The feature is a “clear catalyst” for a multi-year upgrade cycle, he wrote in a note Monday." The stock is now at a RECORD HIGH.
Speaking of RECORD HIGHS. S&P 500 Hits Fresh Highs as Long-Term Bonds Drop: Markets Wrap https://finance.yahoo.com/news/us-futures-waver-traders-juggle-221846138.html (BOLD is my opinion OR what I consider important content) "(Bloomberg) -- Stocks rose to all-time highs as calls about heightened market volatility failed to materialize after Donald Trump’s assassination attack bolstered his chances of taking over the White House. All major equity indexes gained, with the S&P 500 set for its 38th record this year. Trump Media & Technology Group Corp. soared 35%. The candidate’s rising odds of victory bolstered oil producers, gun makers, private prisons and health insurers. Trump’s pro-crypto stance lifted Bitcoin and the industry’s companies. Tesla Inc. rallied as Elon Musk endorsed Trump. Shares of solar energy firms slumped, given Democrats are seen as being more friendly toward the industry. Treasury 30-year yields rose above the two-year for the first time since January on bets that Trump would pursue a more expansive fiscal policy if he wins the November election. The dollar was little changed. “We were shocked by the attempt on former President Trump’s life, but suspect that markets will digest the news quickly and with little fanfare,” said John Stoltzfus at Oppenheimer Asset Management. “Shocking events tend not to deter investors, who we expect will remain focused on economic and earnings results.” The S&P 500 rose to about 5,640. A gauge of the “Magnificent Seven” megacaps climbed almost 2%. Apple Inc. advanced after being named a top pick at Morgan Stanley. The Russell 2000 of smaller firms added 1.5%. Goldman Sachs Group Inc. whipsawed amid a surge in profits and plans to moderate the pace of buybacks. Macy’s Inc. tumbled after ending buyout talks. With little in the way of scheduled economic data, traders are set to pay close attention to Federal Reserve speakers. Among the highlights: Jerome Powell talks Monday, following his congressional testimony last week. The chances of the presumptive Republican candidate, who was shot at a rally in Pennsylvania on Saturday, winning a second term increased in the aftermath of the attack, according to PredictIt data. The Republican National Convention in Milwaukee, held Monday through Thursday, marks the culmination of Trump’s takeover of the party. Viewers will also get an answer to the question swirling for months: He will unveil his vice presidential pick during the convention, heightening the suspense of a closely held decision he has teased for weeks. “We may get a little rally, a Trump bump if you will” and could experience some volatility as political rhetoric will heat up into the Republican Convention,” said Jay Woods at Freedom Capital Markets. Corporate Highlights: BlackRock Inc. hauled in $51 billion of client cash to its long-term investment funds in the second quarter, pushing the world’s largest money manager to a record $10.6 trillion of assets. AutoNation Inc., one of the biggest chains of US car dealerships, warned the cyberattack that crippled retailers across the country until early this month cost the company a significant chunk of second-quarter earnings. International Business Machines Corp.’s proposed $6.4 billion takeover of software maker HashiCorp Inc. will undergo an in-depth antitrust review by the US Federal Trade Commission. Google parent Alphabet Inc. is in talks to acquire cybersecurity startup Wiz Inc., according to a person familiar with the matter. Cleveland-Cliffs Inc. agreed to buy Canadian steelmaker Stelco Holdings Inc. for about C$3.85 billion ($2.8 billion), in the company’s first major move after losing out in its bid for United States Steel Corp. last year." MY COMMENT ALL in all a very mild week this week. Not much going on and as a result there is more focus on what counts....EARNINGS. That is good news for investors enjoying the continuing and growing BULL MARKET.
The CHALLENGING housing market. With high prices and mortgage rates, aspiring and current homeowners feel ‘stuck’ https://www.cnbc.com/2024/07/13/with-high-prices-and-mortgage-rates-homeowners-feel-stuck.html (BOLD is my opinion OR what I consider important content) "Key Points High home prices and current mortgage rates have created a chilling effect on the housing market, stymying aspiring first-time buyers and those looking to move. Affordability has tumbled compared with just a few years ago, requiring people to shift expectations about what the path to homeownership looks like. This adds to economic woes felt by the average person and challenges a key component of the American dream. When Rachel Burress moved into her mother’s house around a decade ago, it seemed like a short-term stop on the path to homeownership. The 35-year-old hairdresser spent those years improving her credit score and saving for a down payment. But with mortgage rates hovering near 7% and home prices skyrocketing, it doesn’t feel like the mother of three will be signing on the dotted line for a place of her own anytime soon. “I don’t even know if I’ll ever get out and own my own home,” said Burress, who lives about 20 miles outside of Fort Worth, Texas, in a town called Aledo. “It feels like we are just stuck, and it is so hard to handle.” Burress’ experience is reflective of the millions of Americans who’ve seen their financial and personal lives hindered by elevated price tags and high borrowing costs for homes. This can help to explain the sour sentiment about the state of the national economy. It also sheds light on an existential anxiety for many: The American dream seems to be even more out of reach these days. A double whammy For aspiring homebuyers such as Burress, the combination of high mortgage rates and rising list prices has left them feeling boxed out. The 30-year mortgage rate, a popular option for home financing in the U.S., has bounced around 7% for the past several months. It pulled back after hitting 8% for the first time since 2000 late last year. But that’s still a big jump from the sub-3% levels seen in the early years of the pandemic — which prompted a flurry of sales and refinancing in the housing market. On the other side of the equation, rising sticker prices are also adding pressure. The Case-Shiller national home price index has hit all-time highs this year. Zillow’s home value index topped $360,000 in May, a nearly 50% increase from the same month five years ago. In turn, affordability is down sharply compared with a few years ago. An April reading on the economic feasibility of homeownership from the Atlanta Federal Reserve was more than 36% off the pandemic high registered in the summer of 2020. Nationally, the share of income needed to own the median-priced home last came in above 43%, per the Atlanta Fed. Any percentage over 30% is considered unaffordable. The Atlanta Fed also found that the negative effects of high rates and prices more than outweighed the benefits from growing incomes for the typical American. That underscores the strength of these detractors, given that the average hourly wage on a private payroll has climbed more than 25% between June of 2019 and 2024. ‘A tough spot’ This tough environment has chilled activity for potential buyers and sellers alike. Theoretically, current homeowners should be excited to see their property values rising quickly. But the prospective sellers are deterred by concerns about what rate they’d get on their next home, creating what a team at the Federal Housing Finance Agency called the “lock-in effect.” There’s already evidence of this stalling in the market: Rates at these levels resulted in more than 875,000 fewer home sales in 2023, according to the team behind a FHFA working paper released earlier this year. That’s a sizable chunk, as the National Association of Realtors reported around 4 million existing houses were sold in the year. On top of that, the FHFA found that a homeowner is 18.1% less likely to sell for every 1 percentage point their mortgage rate is under the current level. The typical borrower had a mortgage rate that was more than 3 percentage points below what they would have gotten in the final quarter of 2023. If this homeowner had instead bought at the end of last year, the FHFA team found that their monthly principal and interest payments would cost around $500 more. Given this, co-author Jonah Coste said current owners touting these low mortgage rates are undoubtedly better off than those looking to buy a first home today. But he said there’s a big catch for this cohort: Moving for a job opportunity or to accommodate a growing family becomes much more complicated. “They’re not able to optimize their housing for their new life situation,” Coste said of this group. “Or, in some extreme circumstances, they’re not doing the big life changes that would necessitate having to move.” That’s the predicament Luke Nunley finds himself in. In late 2020, the 33-year-old health administrator bought a three-bed, two-bath house with his wife in Kentucky at an interest rate under 3%. This home has more than doubled in value in almost four years. After welcoming three kids, they’re holding off on a fourth until mortgage rates or home prices come down enough to upsize. Nunley knows the days of getting a rate below 3% are long gone, but can’t justify anything above 5.5%. “It’s just a tough spot to be in,” Nunley said. “We’d be losing so much money at current rates that it’s basically impossible for us to move.” Most Americans skirt 7% Nunley is part of the overwhelming majority of Americans not paying these lofty mortgages. The FHFA found that nearly 98% of mortgages were fixed at a level below the average rate of around 7.2% in the final quarter of last year. Like Nunley’s, close to 69% had rates more than 3 percentage points lower. The buying boom early in the pandemic is one answer for why so many people aren’t paying the going rate. This eye-popping figure can also be explained by the rush to refinance during that period of low borrowing costs in 2020 and 2021. While these low mortgage rates can help to fatten the pocketbooks of those holding them, Jeffrey Roach, LPL Financial’s chief economist, warned that it can be bad news for monetary policymakers. That’s because it doesn’t offer signs of interest rate hikes from the Federal Reserve successfully cooling the economy. To be clear, mortgage rates tend to follow the path of Fed-set interest levels, but they aren’t the same thing. Still, Roach said that so many people being locked into low borrowing rates on their homes helps explain why tighter monetary policy hasn’t felt as restrictive as it has historically. “Our economy is a lot less interest-rate sensitive,” Roach said. “That means the high rates aren’t really doing what it should be doing. It’s not putting the brakes on, like you would normally expect.” Low housing supply has kept prices up, even as elevated borrowing fees bite into purchasing power. That flies in the face of conventional wisdom, which suggests that prices should slide as rates rise. Looking longer term, experts said an increase in the volume of new housing can help expand access and cool high prices. In particular, Daryl Fairweather, chief economist at housing market database Redfin, said the national market could benefit from more townhomes and condos that are usually less expensive than typical homes. ‘The ultimate goal’ For now, this new reality has created generational differences in homeownership and what the road to it looks like. Zillow found that 34% of all mortgage holders received a financial gift or loan from family or friends for a down payment in 2019. In 2023, that number jumped to 43% as affordability plummeted. It’s also much harder for young people to get on track for purchasing a home than it was for their parents, Zillow data shows. Today, it takes almost nine years to save 20% for a down payment using 10% of the median household income every month. In 2000, it required less than six years. “It’s not the avocado toast,” said Skylar Olsen, Zillow’s chief economist, referencing a joke that millennials spend too much on luxuries like brunch or coffee. Olsen said younger generations should adjust their expectations around ownership given the tougher environment. She said these Americans should expect to rent for longer into adulthood, or plan to attain their first home in part through extra income from renting out a room. For everyday people like Burress, the housing market remains top of mind, as the Texan considers her financial standing and evaluates candidates in the November election. The hairdresser has continued helping her mom with payments on home insurance, utility bills and taxes in lieu of a formal rent. Burress is still hoping to one day put that money toward an equity-building property of her own. But time and time again, unexpected expenses like a totaled car or macroeconomic variables such as rising mortgage rates have left her feeling like the dream is out of reach. “It is the ultimate goal for me and my family to get out of my mom’s house,” she said. But, “it feels like I’m on a hamster wheel.”" MY COMMENT Yes it is a tough environment. BUT....buying a first home has never been easy. These types of articles downplay what ALL OF US have gone through to get a first home. It has always been difficult. Add in the high HGTV expectations now and the hunt for a first home is more difficult. AND....get over it. You are unlikely to EVER see rates below 4% again in your life. Rates below 4% are an extreme aberration. AND.....home ownership is not for everyone. I suspect the ownership rate has never been above about 60-70%. HERE is the TRUTH: HOME OWNERSHIP right now is higher than the past up to about 1995. REMOVE the 2005 to 2015....INSANE LIAR LOAN era.......and the resulting economic collapse....... and where we are right now in home ownership is about the same as always....perhaps even a bit higher than the long term average. REALITY....the percentage of home ownership is actually fairly high right now. What IS different is.....the expectation that EVERYONE should be able to buy a house and the media pushing the negativity.
