Diana Hill
Online Trading Academy
As we start 2016, I thought it might be good to look back on some of the trends from 2015. Looking back can give us a glimpse of the future.
Foreign buyers: The news media says things like, “Foreigners are buying up the U.S.!!!” Well, there is no doubt that there is a great deal of money coming in from many places around the world buying U.S. properties. Most of the foreign investing in the U.S. is concentrated on commercial and luxury markets. In my opinion, this is a positive thing for the real estate market at this time and it’s not affecting the middle class home buyer. I saw this happen in the 80’s when the Japanese where purchasing up all kinds of real estate.
Cash was still being used a great deal in 2015. In California it was reported that 23 percent of buyers paid all-cash. That fact is a strong indicator that the cash buyer market is still going strong.
Credit is easing up but not back to the early 2000 “standards”. According to Laurie Goodman Ph.D., Director of Housing policy at the Urban Institute, “Credit is expanding very, very slightly from absurdly tight levels. Lenders needed clarity before they were going to be willing to underwrite more risky loans, and they have not had that clarity. The good news is that everyone is aware they need it and it is beginning to happen very slowly.” There is evidence that the default rate is half of what it was in the years heading up to the mortgage crisis. This is evidence, Goodman maintains, that lenders have less to fear by taking on more risk.
Rents hit all-time highs with no stop in sight. USC Professor Raphael Bostic states that, “Our forecast continues to report that we will see rents increase pretty aggressively and I don’t see any signs that it is going to slow.” There are two main reasons: 1) many renters can’t get loans and 2) more individuals that are of age and means to buy are choosing to rent.
Lack of Supply/Inventory: We know that six to seven months of inventory is considered “the norm”. In 2015 we saw typically only three months’ worth of inventory. We know that with limited supply, prices increase.
There are a number of things that are leading to the historically low inventory numbers. These are just a few:
- Lack of new building: Since 2008 there have been unparalleled low levels of new housing starts. Builders are building but it’s more commercial product such as apartments, not SFR’s.
- Values are not back to 2007 levels. In many parts of the country values are back to 2007 levels but there are many more that haven’t reached those levels yet. Often sellers in these areas are waiting to sell until the prices come back to the 2007 levels.
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Editors’ Picks
EUR/USD: Gains remain capped by 1.1650
EUR/USD remains in recovery-mode following the closing bell in Euroland on Wednesday, hovering around the 1.1650 zone amid renewed downside pressure on the US Dollar and a marginal improvement in the global sentiment.
GBP/USD appears bid around 1.3370
GBP/USD reverses part of its recent multi-day decline, gathering some balance and managing to reach the 1.3400 region, where some initial resistance seems to have turned up. Cable’s uptick comes in response to some loss of momentum in the Greenback despite the geopolitical scenario remaining fragile.
USD/JPY retraces to near 157.50 amid Japanese intervention fears
USD/JPY pulls back to near 157.50 in the Asian session on Wednesday as bulls turn cautious amid Japanese FX intervention fears following the recent rally to a nearly six-week high, reached Tuesday. Meanwhile, reduced bets for an immediate BoJ rate hike undermine the Japanese Yen, while the flight to safety benefits the US Dollar's status as a global reserve currency amid expectations for a less dovish Fed, keeping the downside limited for the pair.
Editors’ Picks
EUR/USD: Gains remain capped by 1.1650
EUR/USD remains in recovery-mode following the closing bell in Euroland on Wednesday, hovering around the 1.1650 zone amid renewed downside pressure on the US Dollar and a marginal improvement in the global sentiment.
GBP/USD appears bid around 1.3370
GBP/USD reverses part of its recent multi-day decline, gathering some balance and managing to reach the 1.3400 region, where some initial resistance seems to have turned up. Cable’s uptick comes in response to some loss of momentum in the Greenback despite the geopolitical scenario remaining fragile.
Gold recovers modestly despite intensifying Middle East crisis
Gold keeps its daily gains well in place, although a break above the $5,200 mark per troy ounce still remains elusive on Wednesday. The yellow metal’s rebound comes in response to the persistent flight-to-safety amid intense geopolitical tensions in the Middle East and the bearish performance of the US Dollar.
Crypto Today: Bitcoin, Ethereum, XRP rebound amid mixed ETF flows
The cryptocurrency market is showing subtle recovery signs despite heightened global uncertainty following the United States (US) and Israel attacks on Iran and the subsequent retaliations that have morphed into a wider Middle East war.
First Venezuela, now Iran: The US-China energy war escalates Premium
At first glance, the latest escalation involving the United States with both Iran and Venezuela looks like another chapter in a long-running geopolitical story. But viewed through a broader strategic lens, something else may be unfolding: Energy.
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