Wednesday, November 25, 2020

Home Sales -- November 25, 2020

On September, 2020, the Dow was at 27,781.

Yesterday, the market hit an intra-day high of about 30,116.

In less than three months, an increase of 8.4%.

The S&P 500:

  • 3363
  • 3646
  • 8.4%


  • 11168
  • 12108
  • 8.4%

Wow, that surprised me,  to the first decimal point, the three major indices were identical in appreciation.

Russell 2000:

  • 1508
  • 1862
  • 23.5%

Now, this link: total market capitalization of public US companies.

  • September 30, 2020: $29,300,951 million or $29.3 trillion
  • $29.3 trillion x 1.084 = $31.76 trillion

Now assume, the top 10% of the US population held 90% of that $31.76 trillion (use your own numbers/assumptions if you don't like mine):

  • 0.9 x $31.76 trillion = $28.584 trillion
  • US population: 330 million
  • $28.584 trillion / 33 million = $866,181.

So, rounding, assume that the top ten percent of the US population saw their net worth in equity investments jump almost one million dollars between September 30, 2020 and November 24, 2020, any wonder that home sales are surging? From today's news (no link; Google blogger app won't allow it, but googling key phrases in story below will lead you to it; hint: Breitbart):

New single-family houses sold in October at a seasonally adjusted annual rate of 999,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. 
The figure for September sales was revised up from 959,000 to 1,002,000. That was initially reported as a decline from August and below expectations. 
The October figure is 41.5 percent above the sales figure from a year earlier. 
Apart from the revised September number, it is the fastest sales rate since November 2006. 
Figures were revised up for August and July, as well. That indicates that the boom in single-family homes has been even stronger than the data suggested. 
Extremely low mortgage rates and a surge in demand for single-family homes has lifted the residential real estate market this year. Demand for commercial properties, from offices to rental apartments, is down in many big cities as remote working, closed schools, rising murders, and shuttered urban amenities have sent Americans searching for houses in the suburbs. New homes account for about 14 percent of the housing market. 
But because homebuilding is labor-intensive and new homes need to be outfitted with consumer goods, the category punches above its weight-class when it comes to the broader economy. 
The median selling price rose 2.5 percent from a year earlier to $330,600, an indication that demand for new homes remains very high. Supply has struggled to catch up with demand for homes after the building industry shutdown across much of the country this spring. A shortage of existing homes on the market is pushing some buyers into the new home market.

I have a pet peeve with this story and this analysis, but I've run out of time.  

One last thing: my net worth since September 30, 2020, did not quite increase by $866,000 which means I am not in the top 10% of the US when it comes to holding equities. Oh, well. Another star to shoot for.

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