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It means that potential buyers should be prepared to strike quickly, and sellers who have been on the fence through the onset of the coronavirus pandemic might now want to list.

Though many sellers have taken a wait-and-see approach through the pandemic, homes that have made it onto the market have been snatched up relatively quickly by eager buyers. In mid-June, the typical home sold in the U.S. had an offer accepted 22 days after it was listed for sale. That’s as fast as homes have sold since early June 2018, when they typically sold in 21 days. Even at the slowest point of the spring – in late May – that number only climbed to 31 days, just six days slower than late May last year.

The same limited-inventory dynamic – with sellers pulling back from the market more than buyers – has kept home prices relatively steady during the pandemic, though signs point to a modest decline in the coming months.

More homes are coming onto the market – new listings are up 14% month over month – showing sellers appear to be gaining confidence in that buyer demand. Many who listed their homes during the past few weeks were rewarded with a quick sale. Inventory remains incredibly tight and sales are happening quickly, so buyers should be prepared to move fast when they find a home they’re interested in.

“Buyers shopping today might expect to be welcomed by desperate sellers, but they’ll instead discover houses selling like hotcakes in the speediest market in recent memory,” said Zillow economist Jeff Tucker. “The market did slow down in April, but anyone shopping this summer needs to be prepared to keep up with the lightning-quick pace of sales today. The question is whether the tempo will slow after buyers finish playing catch-up from planned spring moves, or if this fast-paced market will stay hot thanks to continued low interest rates and buyers scrambling over record-low summer inventory.”

In 29 of the 35 largest U.S. metros, homes are typically seeing offers accepted faster than a year ago. Homes are selling the fastest – in only five days – in Columbus. Cincinnati (six days), Kansas City (six days), Seattle (seven days) and Indianapolis (seven days) are just behind. Pittsburgh has seen the most dramatic acceleration of late, with sellers typically accepting an offer 17 days sooner than at this time last year and 40 days sooner than a month ago.

The slowest market by some margin is New York, where homes are typically spending 70 days on the market before an offer is accepted, more than three weeks longer than at this time last year. Miami (55 days) and Atlanta (38 days) are the next slowest.

New York and Miami have typically been among the slowest-moving for-sale markets, so the recent slowdown may not be fully attributable to the pandemic. Still, the year-over-year slowdown of 23 days in New York is the biggest in the country, and the six-day slowdown in Miami is the third-biggest behind New York and Atlanta.

Zillow says homes are selling at their fastest pace for 2 years

The 1031 exchange sector is recovering from COVID-19 as small investors seek to grow their portfolios via the tax tool, experts say. In June, IPX 1031, a platform that facilitates 1031 deals, saw an 18 percent decline in number of orders from last June, when orders had hit a recent record high, said, executive vice president and western regional manager Jennifer Keen.

Orders rose 30 percent year over year in January but plunged 30 percent in April and 50 percent in May, she said on a Marcus & Millichap webinar called Maximizing 1031 Exchanges. “2019 was an incredible year for IPX,” she said. “That gives me a lot of confidence — that we’re only down 18 percent.”

1031 exchange investors are motivated by a rare window of opportunity to make high returns, said Marcus & Millichap senior vice president and research services national director John Chang. That window exists because the cost of capital has decreased while capitalization rates have remained stable. “The 10-year Treasury has fallen significantly. It’s around 70 basis points right now, which is the lowest we’ve seen ever. Interest rates are dramatically lower than in the past, and that signals that the yield premium on the asset versus the cost of capital has opened back up and created another investment window.”

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Many small investors are trading multifamily properties for triple-net-lease retail properties, said Marcus & Millichap senior vice president and retail division national director Scott Holmes. “When people go into net lease investments through a 1031 exchange, 47 percent of the time, they’re coming out of apartments; 12 percent are coming out of multitenant retail.”

The federal government also is offering the 1031 exchange sector relief by extending certain deadlines that govern when a property has to trade in order to qualify for the tax deferral. The deadline was pushed from April 1 to July 15 and could push further, Keen said. “During this pandemic, many times you couldn’t see a property and lending became a challenge, and that slowed things down. We’re still not quite up to speed.”

https://www.icsc.com/news-and-views/icsc-exchange/investors-have-a-rare-window-to-make-high-returns-on-1031-exchanges-experts

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week along with weekly coverage from our Housing Market Recovery Index and a weekly video update from our economists. Here’s what the housing market looked like last week.

Weekly Housing Trends Key Findings

• National Recovery Index: The realtor.com Housing Market Recovery Index reached 92.0 nationwide this week, the highest index value since the middle of March when COVID-19 disruptions began. This week’s jump also represents the largest weekly increase in four weeks, taking the index just 8.0 points below the pre-COVID baseline.
• Local Recovery: An additional two markets have crossed the recovery benchmark this week, taking the total number of markets above the January baseline to 10, the highest since the COVID onset. The overall recovery index is showing greatest recovery in Seattle, Denver, Boston, Jacksonville, and Philadelphia, Regionally, the West (99.6) continues to lead the recovery with the overall index now virtually at the January benchmark. The South (93.9), which led the early recovery, is beginning to lag relative to other regions as we head into the summer, with both the Northeast and Midwest (94.5 and 93.6) catching up.
• New listings are down 19 percent. Buyer interest in the housing market has more than fully recovered whether we’re using online traffic or purchase mortgage applications as a gauge. In comparison to buyers, the pace of sellers coming back to the market is lagging which is helping market balance measures such as price and time on market move in a seller-friendly direction. New listings are a crucial pre-cursor to home sales, particularly in an inventory-light market. 
• Median listing prices are now growing at 5.6 percent over last year, more than a percentage point above pre-COVID pace.
• Time on market is now just 13 days slower than last year. While it takes longer to find a buyer and complete a sale compared to this time last year, the gap is shrinking as buyers return and have to move faster to compete for a limited number of homes for sale.
• Total inventory was down 29 percent. The number of homes for sale continues to shrink at a bigger pace relative to last year because buyers outnumber sellers in this unusual summer season.    

Data Summary

	Week ending June 20	Week ending June 13	Week ending June 6	First Two Weeks March
Total Listings	-29% YOY	-27% YOY	-25% YOY	-16% YOY
Time on Market	13 days slower YOY	16 days slower YOY	16 days slower YOY	-4 days faster YOY
Median Listing Prices	+5.6% YOY	+4.6% YOY	+4.3% YOY	+4.5% YOY
New Listings	-19% YOY	-20% YOY	-21% YOY	+5% YOY

Weekly Housing Trends View — Data Week June 20, 2020

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week along with weekly coverage from our Housing Market Recovery Index and a weekly video update from our economists. Here’s what the housing market looked like last week.

Weekly Housing Trends Key Findings

• Median listing prices are now growing at 4.6 percent over last year, just above the pace seen pre-COVID.
• New listings are still down 20 percent. More sellers are returning to the market compared to the early COVID period, but fewer than a week ago, and the number of new listings remains below last year levels. New listings typically peak over the next month (mid-June to mid-July). Given the importance of new home listings to sales, to see home sales bounce back, we’ll need to see a later seasonal peak this year.
• Time on market remained 16 days slower than last year as it takes longer to find a buyer and complete a sale in the current markets. Time on market could speed up if buyers continue to outnumber sellers.
• Total inventory was down 27 percent. Signs are pointing to rising home buyer interest, and steeper declines in inventory are on the horizon unless more sellers list homes for sale. 

Data Summary

	Week ending June 13	Week ending June 6	Week ending May 30	First Two Weeks March
Total Listings	-27% YOY	-25% YOY	-23% YOY	-16% YOY
Time on Market	16 days slower YOY	16 days slower YOY	17 days slower YOY	-4 days faster YOY
Median Listing Prices	+4.6% YOY	+4.3% YOY	+3.1% YOY	+4.5% YOY
New Listings	-20% YOY	-21% YOY	-23% YOY

Weekly Housing Trends View — Data Week June 13, 2020

Mortgage rates have fallen to a new all-time low for the fourth time this year. But there’s significant upside risk to the low rate environment, and Americans may not want to wait too much longer before locking rates in.

The 30-year fixed-rate mortgage averaged 3.13% for the week ending June 18, down eight basis points from a week earlier, Freddie Mac FMCC, -0.60%reported Thursday. The previous record low was 3.15% back at the end of May. A year ago, the 30-year home loan averaged 3.84%.

The 15-year fixed-rate mortgage dropped four basis points to an average rate of 2.58%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage dipped one basis point to 3.09%.

Mortgage rates have hit another record low due to declining inflationary pressures, putting many home buyers in the buying mood,” Freddie Mac’s chief economist Sam Khater said in the report.

The interest rates on home loans roughly track the direction of long-term bond yields, including the 10-year Treasury note. The 10-year Treasury yield TMUBMUSD10Y, 0.699% has seesawed over the past week in response to weakness in the stock market driven by concerns about the rise in coronavirus infections across many parts of the country.

Upticks in coronavirus cases across the country left market participants skeptical of the economic recovery’s sustainability,” said Matthew Speakman, an economist with Zillow ZG, +1.09% . “This sparked a sell-off in stocks and a flight to the safe haven of bonds — something that normally pushes mortgage rates lower.”

‘Rates could just as easily begin to trend upward again, particularly if key economic data or measures to contain or treat the virus show meaningful improvements.— Matthew Speakman, an economist with Zillow

But now the mortgage market is at a turning point, Speakman said. And it all depends on what happens with the spread of COVID-19 from here on out.

“More bad news regarding the uptick in coronavirus cases would likely send rates back downward, possibly to new lows,” Speakman said. “However, rates could just as easily begin to trend upward again, particularly if key economic data or measures to contain or treat the virus show meaningful improvements.”

Rates going up could spell trouble for the broader housing market. Eager to lock in the cheap financing, buyers have flocked to apply for home loans to purchase property. There’s evidence that the low rates, coupled with pent-up demand caused by the coronavirus stay-at-home orders, is  driving a significant recoveryacross the housing market.

An increase in rates would hamper the housing market’s ability to rebound. But it’s not the only headwind the market is facing. “It would be difficult to sustain the momentum in demand as unsold inventory was at near record lows coming into the pandemic and it has only dropped since then,” Khater said.

In other words, with very few homes for sale, there’s a rather low ceiling on how high sales activity can go for the foreseeable future.

https://www.marketwatch.com/story/mortgage-rates-drop-to-another-record-low-but-heres-why-americans-should-think-twice-about-waiting-to-lock-them-in-2020-06-18?siteid=yhoof2&yptr=yahoo

House hunters rushing to lock in record low mortgage rates likely have a bit more time to shop thanks to a pair of announcements from the Federal Reserve this week.

On Wednesday, the Fed’s policy makers said they would maintain the near zero interest rates instituted earlier this year, indicating they expect to keep rates at basement levels through 2022. In its statement, the Fed also said that it would continue aggressively buying government and mortgage-backed bonds at a steady rate to keep markets functioning.

The measures are the most extreme since the 2008 financial crisis and were first announced in mid-March, as steps to limit the spread of the coronavirus wreaked havoc on U.S. businesses and kept house hunters on the sidelines. By reiterating its commitment to these tools, the Fed is indicating that the economy may take longer to recover than hoped, but is also showing that it will take extraordinary measures to help consumers.

“It’s bittersweet,” says Ralph McLaughlin, chief economist at home investment startup Haus. “It means there is concern about the U.S. economy’s ability to take off.”

That was certainly the message the stock market took. The Dow plunged more than 1,800 points on Thursday as investors reacted to the Fed’s decision and a spurt of new COVID cases around the country.

What the Fed’s move means for mortgage rates

Low rates from the Fed do mean some good news for homeowners: Mortgage rates are likely to remain near record lows for an extended period. (For the week ending June 11, the average interest rate for a 30-year fixed-rate mortgage was 3.21% with 0.9 discount points paid.)

“The risk of rates trending higher, which is something we were facing no more than a week ago, has almost disappeared,” said Zillow Economist Matthew Speakman.

The expansion of the bond buying program, known as “quantitative easing,” also means that people who want to take out a new mortgage or refinance an existing one should be able to, since mortgage lenders will have an easier time selling on mortgages.

“The Fed’s statement essentially stated they are not going to rock the boat,” wrote Sam Khater, chief economist at mortgage giant Freddie Mac. “The Fed’s stance is positive news for the housing market and allows mortgage rates to drift lower since they have room to decline given mortgage spreads.”

What Khater means by “spread,” is the gap between the 10-year Treasury yield and 30-year mortgage rates. Mortgage rates are not directly tied to the federal funds rate, the short term rate the Fed controls. Instead mortgages tend to move in step with the 10-year Treasury note, which responds quickly to Fed statements, since most homeowners typically move or refinance within a decade.

That said, some economists do not expect mortgage rates to sink much lower than they are right now since most mortgage lenders are already operating at capacity. Others warn the record low rates are not available to everyone.

“The rates that we are talking about are the average rates. They apply to your most vanilla loans,” says Speakman. Think 30-year loans for people with excellent credit and who can make a 20% downpayment. “For others, it is still really challenging to get that credit.” 

https://money.com/fed-move-mortgage-rates/

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In light of the developing COVID-19 situation affecting the industry, we want to give readers more timely weekly updates. You can look forward to a Weekly Housing Trends View near the end of each week. Here’s what the housing market looked like last week.

Weekly Housing Trends Key Findings

• Total inventory was down 23%. Signs are pointing to rising home buyer interest, and steeper declines in inventory are on the horizon unless more sellers list homes for sale.  
• Time on market was 17 days slower than last year as it takes longer to find a buyer and complete a sale in the current markets.
• New listings down 23%. With fewer sellers returning to the market compared to a week ago, the yearly declines in new listings remain roughly steady, suggesting that while the general trend is toward improvement, it’s a bumpy road and seller confidence is not quite back to normal yet.  
• Median listing prices have maintained momentum and growth is now closer to pre-COVID levels.

Data Summary

	Week ending May 30	Week ending May 23	Week ending May 16	First Two Weeks March
Total Listings	-23% YOY	-22% YOY	-20% YOY	-16% YOY
Time on Market	17 days slower YOY	16 days slower YOY	15 days slower YOY	4 days faster YOY
Median Listing Prices	3.1% YOY	3.1% YOY	1.5% YOY	+4% YOY
New Listings	-23% YOY	-20% YOY	-28% YOY	+5% YOY

Weekly Housing Trends View

New listings: On the slow path to recovery. Nationwide the size of declines held mostly steady this week, dropping 23 percent over last year, a slight increase over last week but still an improvement over the 30 percent declines in the first half of May. 

More properties will have to enter the market in June to bring the number of options for buyers back to normal levels for this time of the year, nationwide and in all large markets. 
In the first two weeks in March (our pre-COVID-19 base), new listings were increasing 5 percent year-over-year on average. In the most recent three weeks ending May 16, May 23, and May 30 the volume of newly listed properties decreased by 28 percent, 20 percent, and 23 percent year-over-year, respectively. The continued declines in newly listed properties mean we’ve yet to see the full wave of spring sellers return to the market. However, recovery could be on the horizon as three quarters (36 of 99) of large metros continue to see smaller declines this week, including New York and Chicago.

Asking prices: Price gains keep momentum as the mix of homes for-sale continues to revert back toward pricier properties.

In the first two weeks of March (our pre-COVID-19 base), median listing prices were increasing 4.4 percent year-over-year on average. In the most recent three weeks ending May 16, May 23, and May 30, the median U.S. listing price posted an increase of 1.5, 3.1 and 3.1 percent year-over-year, respectively. While current price gains remain below pre COVID-19 levels, we expect them to continue accelerating in the weeks to come as more sellers regain confidence and inventory remains limited relative to buyer interest. Locally, 81 of the largest 100 metros saw asking prices increase over last year.

Total Active Listings: Sellers have yet to come back in full force, limiting the availability of homes for sale. Total active listings are declining from a year ago at a faster rate than observed in previous weeks, and this trend could worsen as buyers regain confidence and come back to the market before sellers.

Weekly data show total active listings declined 23 percent compared to a year ago as the lack of sellers is currently outweighing the extra time homes spend on the market. Signs, such as more purchase mortgage applications than last week and a year ago, are pointing to rising home buyer interest, and steeper declines in inventory are on the horizon unless more sellers list homes for sale to meet rising demand. 

Time on market: While new listings and asking prices are gaining momentum, homes are still sitting over two weeks longer on the market than this time last year. It could take a few more weeks for time on market to reach pre-COVID levels as buyers come back to the market and the pace of sales resumes.
In the first two weeks in March (our pre-COVID-19 base), days on market were 4 days faster than last year on average. The trend in time on market began to slow in mid-March, but the indicator didn’t register an increase until April. Data for the week ending May 30 showed that time on market was 17 days or 30 percent greater than last year, the biggest increase in time on market since 2013. With fewer fresh new properties and buyers taking their time in this strange new world of home searching, sellers should be prepared to wait longer to find a buyer and longer for the transaction to close as well. It’s visible in local data as well as the national figures, with 85 of the largest 100 metros showing similar double-digit percent increases in time on market from one year ago. However, more markets continue to see smaller single-digit increases and could see time on market drop in June, including Dallas, San Francisco and Nashville.

Weekly Housing Trends View — Data Week May 30, 2020

Mortgage rates have remained below 3.3% for four straight weeks

Mortgage rates fell to near-record lows — and there’s reason to think they will drop even lower in the future.

The 30-year fixed-rate mortgage averaged 3.24% for the week ending May 21, down four basis points from a week ago, Freddie Mac FMCC, -4.07% reported Thursday. That was just above the record low set earlier in May of 3.23%.

For the 15-year fixed-rate mortgage, the average rate dropped two basis points to 2.7%. Meanwhile, 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.17%, down one basis point from last week.

This week’s decline in rates was prompted by comments from the Federal Reserve. “Mortgage rates slid today after a sobering assessment from the Federal Reserve of the tough economic road ahead,” said George Ratiu, senior economist at Realtor.com. The central bank downgraded its economic forecast ahead of its meeting last month, according to notes released Wednesday.

The Federal Reserve indicated that they would keep interest rates low for an extended period of time to help the economy bounce back from the coronavirus pandemic. But Fed officials have warned that the central bank’s effectiveness in addressing the economic impact of the outbreak could be limited if the U.S. doesn’t resolve public health issues.

“Even as the stock market has improved in recent weeks — normally prompting an upward move in mortgage rates — the still-uncertain outlook for the economy and seemingly low risk of inflation has kept bond yields in check,” said Zillow ZG, +4.77% economist Matthew Speakman.

Historically, mortgage rates have roughly followed the direction of long-term bond yields, including the yield on the 10-year Treasury note TMUBMUSD10Y, 0.660%. That relationship has diverged somewhat throughout the coronavirus crisis. 

Read more:‘Investors who own Airbnb properties are looking for immediate liquidity.’ Is this a good time to buy a home?

While bond yields and mortgage rates have both fallen throughout the outbreak, mortgage rates have not decreased as much as bond yields would suggest. That’s in large part due to friction in the mortgage industry caused by the massive wave of forbearance requests that servicers have received.

With millions of Americans skipping their monthly mortgage payments, firms have had to tighten their lending activity to cope, rather than drop rates.

However, the spread between bond yields and mortgage rates means that the mortgage industry has some wiggle room to bring rates down even further, Sam Khater, chief economist at Freddie Mac, said in his company’s weekly report.

Meanwhile, the quotes that borrowers actually see will likely continue to depend on their creditworthiness so long as the U.S. economy remains on shaky ground, experts said.

“Borrowers with great credit who are seeking a straightforward loan are being quoted at significantly lower rates than less creditworthy borrowers, resulting in a range of rates that tells a broader story than just the average,” Speakman said.

https://www.marketwatch.com/story/mortgage-rates-fall-to-near-historic-low-on-concerns-about-coronavirus-pandemic-2020-05-21?siteid=yhoof2&yptr=yahoo

Bloomberg) — It’s the surprise of a spring selling season that’s been anything but normal: Buyers returning to the housing market have been battling over the few available properties.

While sales are way down, the lack of inventory has propped up prices and led to bidding wars, even as economic fallout from the pandemic mounts and real estate agents adjust to new public health guidelines that have made it more difficult to market homes.

“Since the pandemic began, demand fell off a cliff,” said Taylor Marr, an economist at Redfin Corp. “What most people overlook is that sellers also pulled back.”

The supply-demand imbalance meant that roughly 40% of homebuyers that Redfin agents worked with recently faced competition when they tried to purchase a home. The rate was even higher in cities like San Francisco, Boston and even Fort Worth, Texas, where more than 60% of properties the company’s clients bid on received multiple offers.

The U.S. housing market went into the Covid crisis with a supply shortage that was driving up prices beyond the reach of many buyers, even with years of low interest rates. That problem hasn’t gone away, despite the economic uncertainty. The number of active listings shrank by almost a quarter in April, compared with a year earlier, according to Redfin.

Still, the market has cooled. Sales of existing homes are projected to fall 20% in April from a month earlier, according to estimates compiled by Bloomberg. That would follow an 8.5% drop in March. Construction of new houses plunged by the most on record in April, with builders waiting out the virus. That means new supply will be slower to materialize.

The market dynamics are a shock to some buyers. Kenzo Teves, a 24-year-old business analyst for a pharmaceutical company, decided to start shopping for his first house this spring, because interest rates were so low. He had money saved for a down payment and was secure in his job — factors he thought would help him find a home near Boston.

In late April, he made his first bid on a three-bedroom house in Chelsea, Massachusetts, that was listed for $420,000. The property got six other offers and even bidding $30,000 over the asking price wasn’t enough to cinch the deal.

“It’s pretty strange,” he said. “I would have thought that it would have tipped more to my favor as a buyer.”

The inventory shortage is being felt in smaller cities, too. Kim Park, an agent with Keller Williams Realty in Boise, Idaho, said her business is down about 20% because sales have slowed. But bargains are still hard to find.

She’s working with a young family with two kids and a rental lease coming up for renewal next month. To buy a house for almost $300,000, they had to fight off three other bidders and pay $10,000 above asking price, Park said. They got it only because the winning bidder’s financing fell through.

Homeowners in Boise are staying put, worried about about letting potential buyers in during the pandemic or upgrading to a more expensive property when employment is so tenuous.

“It’s made our tight market that much tighter,” Park said.

In Los Angeles, Sally Forster Jones said two of her clients bid unsuccessfully this month on two different houses. One was listed for about $800,000 and the other for less than $1.5 million. Each received more than 30 offers and are now in escrow at above the listed price. Jones declined to share specifics on the homes because her clients made backup offers and she doesn’t want to invite more competition.

“I’m encouraging my sellers to put their property back on the market,” she said. “The fact that there’s limited inventory is to their advantage right now.”

Not all real estate agents see cutthroat competition. Nina Hatvany, a luxury agent with Compass in San Francisco, said buyers are coming back to the market but the complications of showing houses during a pandemic has weeded out all but the most motivated people. And, even then, there’s sometimes a mismatch between what people think a property is worth.

“I’ve got plenty of buyers saying, ‘I’m ready to buy if it’s a good price,’” she said. Meanwhile, “the sellers are worried about taking a big hit.”

Home prices will hold up, at least through the summer, but declines are coming, said Mark Zandi, chief economist at Moody’s Analytics. Once foreclosure moratoriums and forbearance programs end, lenders will start repossessions as unemployment persists. Ultimately, as many as 2 million homeowners will lose properties because of the the pandemic, he said.

In the near term, buyers are going to have to slug it out, especially for the types of property that are most in demand. Redfin’s data show that houses listed below $1 million were the most competitive, partly because banks have tightened standards for jumbo loans, said Marr. With everyone sheltering in place, buyers are also more eager to buy single-family houses than condos.

https://www.yahoo.com/finance/news/bidding-wars-back-even-housing-150005227.html

Continuing our research into the Real Estate market and our expectations over the next 6+ months or longer, we want to point out the disconnect between the current US stock market rally and the forward expectations related to the real economy.  Our researchers believe the current data from Realtor.com as well as forward expectations suggest a major shift related to “at-risk” real estate (both commercial and residential).

Unlike the 2008-09 credit crisis, the COVID-19 virus event is quickly disrupting consumer engagement within the global economy and disrupting spending activities.  Spending is shifting to online, fast food, and technology services for those that still have an income.  For those that have lost their jobs, spending is centered around surviving the COVID-19 virus event and hoping to see new opportunities and jobs when things open back up.

The coronavirus-fueled economic downturn is hitting homeowners hard. And the worst may be yet to come.

2008-09 Real Estate Price Collapse Chart

The biggest difference between 2008-09 and now is that the Real Estate sector is not the driving force behind the economic collapse – it is part of the collateral damage of the COVID-19 virus event related to failed consumer businesses, loss of jobs, disruption to the consumer economy and the destruction of income for many.  Yes, for a while, some people will be able to keep things together and “hold on” while hoping the economy comes back to life quickly.  Others won’t be so lucky.

The one aspect of all of this that people seem to fail to understand is the shift in consumer mentality related to the shifting economic environment.  Right now, consumers are dealing with the shock of job losses, the virus crisis itself and what the future US and global economy may look like.  Many people fail to understand that we really don’t know what the recovery process will become or when it will start.  Yes, we are making progress in trying to contain the COVID-19 virus, but the process of rebuilding the global economy to anywhere near the early 2020 levels is still many months away and full of potential collateral damage events.

Multi-Sector Price Trend Chart (Daily)

To help illustrate how the markets are reacting to the optimism of capital being poured into the global economy vs. the reality of the Consumer and Financial sectors, this chart highlights the SPY (BLUE) current price activity vs the NASDAQ 100 Financial Sector (GREEN) and the Consumer Discretionary sector (GOLD).  The SPY recently disconnected from a very close correlation to the other sectors near mid-April – about 2 weeks after the US Fed initiated the stimulus program.  The S&P, NASDAQ, and DOW Industrials have benefited from this disconnect by attracting new investments while the Consumer and Financial sectors have really started to come under moderate pricing pressure.

Concluding Thoughts:

We believe this disconnect is related to the perceived reality of certain investors vs. other types of investors.  Institutional traders may be pouring capital into the US major market indexes while more conservative traders are waiting out the “unknowns” before jumping into the global markets.  We believe the extended volatility will create waves of opportunity as capital rotates between sectors attempting to find new opportunities for quick gains.

We also believe the unknown collateral damage processes will present very real risks over the next 6+ months as the markets seek out a real bottom.

A recent MarketWatch article suggests a new mortgage crisis in inevitable given the disruption to the US economy and consumer’s ability to earn income and service debt levels.

Pay attention.  These recent rallies in the US major indexes may not be painting a very clear picture of the risks still present in the US economy.  It is almost like speculation is driving prices higher while economic data suggest major collateral damage is still unknown.  We suggest reviewing this research article for more details:

If you want to improve your accuracy and opportunities for success, then we urge you to visit www.TheTechnicalTraders.com to learn how you can enjoy our research and our members-only trading triggers (see the first chart in this article).  If you are managing your retirement account or 401k, then we urge you to visit www.TheTechnicalInvestor.com to learn how to protect your assets and grow your wealth using our proprietary longer-term modeling systems.  Our goal is to help you find and create success – not to confuse you.

In closing, we would like to suggest that the next 5+ years are going to be incredible opportunities for skilled traders.  Remember, we’ve already mapped out price trends 10+ years into the future that we expect based on our advanced predictive modeling tools.  If our analysis is correct, skilled traders will be able to make a small fortune trading these trends and Metals will skyrocket.  The only way you’ll know which trades to take or not is to become a member.

https://www.yahoo.com/news/real-estate-showing-signs-collateral-141407308.html