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Market Snapshot July 23, 2021

Good Friday AM,

After a stellar Monday and a big reversal on Tuesday, Wednesday stands out as the week’s big shift back toward last week’s trading range (higher rates). Let’s hope we are able to hang tough and not break through support (we are sitting on that line). No one likes to go into the weekend with rates ending at their worst levels. Unfortunately, lots of data next week plus a Fed meeting has speculators speculating and that can drive pessimism. Fingers crossed we hang tough, but I expect some leakage above that line in the sand before the markets close.

So now into some relevant market insight…

High School economics as always, strong demand pushed U.S. home prices to a record high in June. The median existing-home price rose to $363,300 last month, up 23.4% from a year earlier, the National Association of Realtors said. The silver lining for buyers: rising prices are prompting more homeowners to list their houses. Classic spin here. Homes sold in June received four offers on average, down from five offers the previous month, said NAR chief economist Lawrence Yun. But the number of homes for sale remains far lower than normal, and robust demand due to ultralow mortgage-interest rates is expected to continue pushing home prices higher, Nicole Friedman reports (this we can agree on).

Is inflation really going to be transitory as the Fed has repeated? I thought so before reading this in the WSJ. Now I’m not so sure (but I am going to stock up on Oreos today). If not transitory and inflation is here to stay, the crystal ball says higher rates and price deflation across most asset classes. American companies are starting to test the extent of their pricing power. Faced with rising costs for materials, transportation and workers, companies are charging more for products from metal fasteners to Oreo cookies, helping fuel inflation like the U.S. hasn’t seen in more than a decade. As customers accept the price hikes, some big companies said they expect to raise prices even more. Others are more cautious, unsure if U.S. consumers have the appetite to absorb additional increases.

And no more stimulus please. Can we just get back to a normal, responsible, credit environment? More jobs available than people to fill them in many cities. Yet, expanded mortgage-assistance programs for homeowners who are at the end of forbearance plans are expected to be unveiled by the Biden administration today, as it seeks to prevent a sharp rise in foreclosures. Many tenants are at risk of being thrown out of their homes when an eviction moratorium expires on July 31 as state and local governments struggle to distribute $47 billion in federal aid.

And lastly, for those who question why real estate prices are likely to continue to increase through the future (albeit at a more moderate pace), here is a great metric to use in conversations. After growing fast for decades, Clark County’s population is expected to swell by another 1 million people by 2060, a recent forecast shows. Around 3.38 million people are expected to live in Clark County nearly 40 years from now, up from an estimated 2.38 million residents last year, according to UNLV’s Center for Business and Economic Research. The forecast jumped by almost 300,000 from just a few years ago, as the research center projected in 2019 that nearly 3.09 million people would live in Clark County by 2060.

Please remain safe and healthy, enjoy the weekend and first, make today great!