The election is over, and the analysts have spent two weeks telling us what the results mean. The stock market rallied just before and after the election was called, but we don’t know if that was just the euphoria of uncertainty being removed, or the start of a longer-term rally — especially with positive vaccine news released during this period. Now that the dust has settled, we still have the same issues to deal with.
First and foremost is the pandemic itself. Without the end of the pandemic, the economy does not fully heal. It is hopeful that a stimulus bill to bolster the economy will not wait until the new year, because small businesses and citizens need help now. The size of the stimulus bill and the specific relief contained therein have been debated for months– and 2021 could be a lot brighter than the tough year we have faced in 2020. The recent rally in the stock market in reaction to positive news about a vaccine tells us the markets are hopeful for exactly that.
The Markets. November 13, 2020
For the week ending November 12, Freddie Mac announced that 30-year fixed rates rose to 2.84% from 2.78% the week before. The average for 15-year loans increased slightly to 2.34% and the average for five-year ARMs rose to 3.11%.
American homeowners will refinance home loans worth nearly $1.8 trillion this year as they lock in historically low rates. However, the window of opportunity for refinancing into super-cheap loans could be closing.
Many housing economists now expect rates on home loans to edge up gradually from recent record lows. Economists expect the average rate on a 30-year loan to rise to 3.5 percent by the end of 2021.
“Looking back on this, years from now, you will remember 2020 as an absolute banner year for this industry,” Fratantoni said. A 3.5 percent home loan is still low by historical standards. However, it would be high enough that far fewer homeowners would be enticed into refinancing.
The pandemic has sparked Americans to relocate in large numbers. From February through July, more than 15.9 million people filed change-of-address requests with the United States Postal Service. Twenty-eight percent of nearly 10,000 adults recently surveyed by the Pew Research Center said the most important reason they moved was to reduce their risk of contracting COVID-19. Another 23% said they moved because their college campus closed; 20% wanted to be with their family; and 18% cited financial reasons for their move, including job loss. Many of these moves may be temporary, however. Temporary change-of-address requests were up nearly 27% from February through July compared to last year, according to an analysis from MyMove.com. A temporary change of address reflects consumers who forward their mail to a new location but plan to move back to their old address within six months. Smaller cities are adding population during the pandemic and the majority of individuals moving during the pandemic are leaving highly populated cities. Source: MyMove.com
ATTOM Data Solutions, said profits for home sellers nationwide continue to hit high points despite the economic distress caused by the coronavirus pandemic. The company’s quarterly U.S. Home Sales Report said the typical third-quarter home sale in the U.S. generated a gain of $85,000, up from $75,000 in the second quarter and $66,000 a year ago, This profit represented a 38.6 percent return on investment compared to the original purchase price, up from 37.5 percent in the second quarter and 33.7 percent a year ago. Todd Teta, chief product officer with ATTOM Data Solutions, said both the raw-profit and return-on-investment figures stood at the highest points since the U.S. economy began recovering from the Great Recession in 2012 and represents a continued increase even as the coronavirus pandemic has damaged the economy and led to spikes in unemployment throughout the country this year. “The housing market remains relatively immune from the economic havoc caused by the coronavirus pandemic,” Teta said. “It’s almost as if the housing market and the overall economy are operating in different worlds. Things remain in flux, given the significant uncertainty about when the pandemic might recede or what impact the recent resurgence could have in different areas of the country. But with interest rates at rock-bottom levels and declining supplies of homes for sale, conditions remain in place for continued strong prices and returns.” Source: ATTOM Data Solutions.