Morning Report: 35% of the top 100 metros are overvalued

Vital Statistics:

Stocks are higher this morning as overseas stocks rebound. Bonds and MBS are down.

Small Business Optimism increased in April, according to the NFIB. Pretty much every component of the index increased, with only capital expenditure plans unchanged from March. “The ‘real’ economy is doing very well versus what we see in financial market volatility. Many jobs were created, and GDP produced with no substantive inflation pressure. The pace of economic growth has accelerated, and consumers and small businesses are an important part of the improvement in sales,” said NFIB’s Chief Economist Bill Dunkelberg.

What will global warming do to Florida real estate values? According to one environmentalist, lending for 30 year for Florida property is insane. “No one should be lending for 30 years in most of Florida,” [Woods Hole senior fellow Spencer Glendon] said at an investment conference in New York last week. “During that time frame, insurance will disappear and terminal values” — future resale income — “will shrink. I tell my parents that it’s fine to rent in Florida, but it’s insane to own or to lend.” Note that the US flood insurance is heavily subsidized and will probably have to be cut back if the more extreme forecasts end up being borne out.

Stocks had a bit of a rebound yesterday after Steve Mnuchin assured that the trade talks with China are still ongoing. Uber had another rough day, with the stock closing at $37.10 a share, down 18% from the IPO price on Friday.

30 day DQs are down 80 basis points from 4.8% to 4% according to CoreLogic. DQs fell in every bucket, and the foreclosure rate fell from 0.6% to 0.4%. Separately, home prices rose 3.7% YOY in February. 35% of cities have overvalued housing stock, while 26% are undervalued and 39% are fairly valued.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical View all posts by Brent Nyitray