Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

https://dailyalts.com/wp-content/uploads/2020/10/new-home-2897352_640.jpg

Redfin CEO Glenn Kelman says the boom could last into next year.

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election. (CNBC)

Kelman: Too good to last forever

“This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Kelman said.

Recent data from the National Association of Realtors shows up the strength in the housing market.

Existing home sales shot up 9.4% in September beating expectations. Even though the median purchase price of a home rose approximately 15% year over year, there is just a 2.7-month supply of for-sale homes, showing tight market inventory conditions.

The 30-year fixed-rate mortgage averaged 2.80% for the week ending Oct. 22, down from 2.81% in the previous week and 3.75% a year ago, according to the Freddie Mac Primary Mortgage Market Survey. Therefore, mortgage rates crept even lower in the latest week.

However, “there’s no way it can last forever,” Kelman warned of the bullish conditions.

Canada: Off the charts

Meanwhile, at the northern neighbor, home sales activity in September is described as “off-the-charts.”

Housing data released by the Canadian Real Estate Association (CREA) last week showed a nationwide year-over-year increase in sales of 45.6%.

This was a new all-time monthly record for the third month in a row.

“This is starting to sound like a broken record (about records being broken), but Canadian home sales and prices set records once again in September … as they did in July and August,” said Shaun Cathcart, senior economist at CREA, in a statement.

Real Estate ETFs in the U.S.

The year-to-date performance of some real estate ETFs is shown below:

iShares U.S. Home Construction ETF (ITB)              +24.61%

SPDR S&P Homebuilders ETF (XHB)                          +20.83%

Vanguard Real Estate Index Fund ETF                      -13.91%

It may be noted that despite the boom conditions in housing, real estate ETFs and stocks have declined in recent days.

According to Barron’s, this may be due to yields on the 10-year and 30-year Treasuries moving higher in recent weeks.

Other reasons could be fears of inflation ticking up in the future amidst an improving economic situation.

Nevertheless, the view is that interest rates are likely to remain low for longer. So demand may remain strong.

“Part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes,” said Redfin’s Kelman.

Related Story:   Mortgage Rates Set Another Record Low; Real Estate ETFs Could Benefit

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2022/08/10_sound_box_2.0_payment_terminal_storage_optimization-2-800x500-1.jpg
FinTech: India’s PayTM Gets Heat From Proxy Advisory Firm
August 12, 2022     FinTech, News

Proxy advisory firm Institutional Investor Advisory Services India Ltd. (IiAS) has issued a note ahead of PayTM’s (NSE: PAYTM) annual shareholders’ meeting on August 19 calling for the replacement of…

https://dailyalts.com/wp-content/uploads/2022/08/planet-g69e0d7747_640.jpg
Venture Capital: Lockheed’s Venture Arm To Boost Investment In Space Startups
August 12, 2022     News, Venture Capital

Lockheed Martin (NYSE: LMT) and its venture finance arm Lockheed Martin Ventures plans to boost the latter’s investment outlay from $200 million to $400 million.

https://dailyalts.com/wp-content/uploads/2022/08/picpay-lover.jpg
Digital Assets: Brazilian Fintech PicPay Launches Crypto Exchange With Paxos

PicPay, the well-known Brazilian payment app, has got its shoe in the crypto door in partnership with Paxos, a leading regulated blockchain infrastructure company. Picpay is opening crypto trading services…

https://dailyalts.com/wp-content/uploads/2022/08/one-braham-logo-2.jpg
FinTech: Telecom Behemoth BT Adds Barclaycard Payments To Partnership Network For Micro-Businesses
August 12, 2022     FinTech, News

BT (LON: BT.A), the telecom major, announced that Barclaycard Payments had joined its partnership network seeking to help the growth of UK microbusinesses. BT customers with 0-5 employees would get…