Morning Report: Homebuying demand surges

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S&P futures 2964 -64.1
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30 year fixed rate mortgage 3.19%

 

Stocks are lower this morning as investors fret about a second wave of COVID-19 cases. Bonds and MBS are flat.

 

We don’t have a ton of economic data this week, but Jerome Powell will be speaking on Tuesday and Wednesday.

 

Homebuying demand is even stronger than a year ago, according to Redfin. Supply is still restricted, with many opportunistic sellers pulling their homes off the market because of health concerns. “It’s just bananas, with so few listings and so many buyers,” said Ms. Shakur, the Redfin agent in Maryland. “Having lived through the 2008 bubble, I just want to be cautious. Maybe it’s nowhere near the same size as it was in ’08, and maybe it’ll turn out not to have been a bubble at all. But buyers are desperate. If a property is in a desirable neighborhood, buyers will overpay. Bidding wars, escalations, no inspections, agreement to pay over appraised value, all of that’s becoming the norm.” Adds Mr. Palmer, the Redfin agent in Seattle. “Anything I’m pricing correctly right now is flying off the shelf.”

 

homebuyer demand

 

The COVID-19 crisis, along with civil unrest, and the ability to work from home will cause a flight to the suburbs, similar to what we saw in the 1970s and 1980s.

 

Building permit growth is robust as builders recognize the opportunity in front of them. The South is seeing double-digit growth in permits, while the West is up about 6%. Surprisingly, multi-family is much weaker, but the multi-family series tends to have a lot of month-to-month volatility for some reason.

 

What would Quicken’s valuation be in an IPO? Some are suggesting tens of billions of dollars. The big question: would it be valued like a fintech company, or a plain old mortgage bank?

 

Consumer confidence is coming back. “The turnaround is largely due to renewed gains in employment, with more consumers expecting declines in the jobless rate than at any other time in the long history of the Michigan surveys,” Richard Curtain, Chief Economist said.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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