Some Thoughts on Recent Market Happenings
Written by James V. Smith of Hughes Browne Group
- One of the large factors driving the recent home price increases is the strengthened presence of large institutional investors buying homes with the intention of renting them out. In 2011, no single investor in the U.S. owned more than 1,000 homes. As of October 2021, just FIVE companies own a total of 280,637 homes in the U.S. How will this play out over time? Will large corporations continue to siphon off American homeowner equity? When large deep-pocket investors buy, they go through multiple avenues - the MLS, foreclosure auctions, and by building homes to rent. When selling, however, these companies almost always sell in bulk to other institutional investors. Only 0.5% of institutionally owned homes are sold to their tenants. Furthermore, the financial dominance of these large investment firms allows them to outcompete first-time homebuyers for affordable starter homes, drives up home prices, and contributes to the current lack of inventory. (U.S. House of Representatives, Committee on Financial Services - click here to read full report)
- It’s been well reported that the stock market is off to a brutal start in 2022. This is the sixth instance where the S&P 500 is down more than 15% halfway through the year. But, a rough first half doesn’t necessarily mean that trend will continue through the rest of the year. In each of the five prior first half declines, the S&P rose in the second half, with a median growth of over 15%. (MarketWatch)
- Demand to move to Florida is still at an all-time high as inventory remains sparse. In 2021, more than 547,000 people exchanged out-of-state driver’s licenses for ones with Florida addresses. That was a 40% increase from 2020 and nearly 20% greater than the five-year average between 2017 and 2021. So far this year the migration continues - from Jan. 1 through the end of May, 235,261 people exchanged out-of-state driver’s licenses for ones from Florida. Where are all these people coming from? You probably guessed it - New York, with 26,151 licenses turned in, New Jersey (12,907) and California (11,972) topped the list of license exchanges. Pennsylvania (10,304) and Illinois (10,047) came in fourth and fifth place. (Palm Beach Post - click here to read)
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