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 holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
GBP/USD holds medium-term bullish bias above 1.3600
The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.
USD/JPY keeps the red below 157.00 on intervention risks
The Japanese Yen sticks to its modest intraday recovery gains against a broadly weaker US Dollar on the back of speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japanese officials stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, in turn, triggered an intraday USD/JPY turnaround from the 157.65 region, or a two-week top, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Editors’ Picks
EUR/USD holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
USD/JPY keeps the red below 157.00 on intervention risks
The Japanese Yen sticks to its modest intraday recovery gains against a broadly weaker US Dollar on the back of speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japanese officials stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, in turn, triggered an intraday USD/JPY turnaround from the 157.65 region, or a two-week top, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Gold remains supported by China's buying and USD weakness as traders eye US data
Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.
Cardano steadies as whale selling caps recovery
Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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