23 Jun Millennial Getting Priced Out of the Housing Market……again
Mortgage bonds continue to hug their 200-day moving average, as the Republican Senate prepares to present a revised healthcare bill for vote. Commentators and political speculators are split as to the likelihood of the new bill passing. Although a few (such as Utah’s Senator Mike Lee) are pushing back on the bill because they feel it doesn’t go far enough, many are willing to vote in favor of the bill to remain congruent with their goal of repealing and replacing Obamacare. Since this bill has very little popularity, it isn’t getting much public attention from the GOP. It will be interesting to see how the stock market responds if the bill is passed. Although it would help boost corporate profits, it doesn’t make nearly the level of impact originally hoped for by Wall Street.
The housing market continues to show strength, with the nations New Home average sales price increasing 16.8% year-over-year. The surge in New Home prices suggests a continued tightening in the supply of low to mid-sized homes. The lack of supply will continue to drive Existing Home prices higher, as consumers will have to cut a little deeper into their budgets to afford owning a home. As a result, rent will also continue to climb, making this a tough time for young people who leave the comfort of their parent’s home in search of independence. At some point, either wages need to climb or Home Prices need to slow. The path of stagnant wage growth and climbing housing expense can’t be sustained.
Until bonds can find the strength to make a decisive break above their 200 DMA, the safe play for those not able to monitor the markets is to lock.