Good Tuesday AM,

Great piece from Dan Rawitch today. Home appreciation is an interesting point…

Bonds are flat again today and this is no surprise. Short of some unknown surprise, bonds will likely continue moving sideways until we see the Non farm payroll numbers on Friday. Today, we learned that home prices achieved another shocking record with year over year price appreciation of 15%! WHAT! Believe me when I tell you that these numbers are not sustainable. There has NEVER been a time in history where home appreciation exceeded income gains without something breaking. In this case we have home prices exceeding income growth by 5X! Consumer confidence also took a big jump but when you consider record breaking home prices AND record stock market prices, it is not a surprise that consumers are feeling good. We are seeing housing sentiment numbers over the last couple of weeks which are clearly telling us that the vast majority of home shoppers think that now is NOT a good time to buy a home. I will not render my opinion on this point because I think homeownership is less about the timing of when one buys and more about the sense of well being that comes from owning a home. That said, the appreciation will begin slowing very soon. I am in no way prediction a crash or a bubble but one would have to be foolish to believe that homes can continue to rise faster than income rises. As for rates, not much will happen until Friday, unless as I said above and we get a surprise.

Please remain safe and healthy, make today great!