Q2 2024: Macro Update on Real Estate
Substituting 4/3 Daily Market Note with a Macro Note on Real Estate & Consumer
Note: Today’s Premium Research Note for Members will be an update on the US Real Estate sector and what it means for U.S. Consumers and market implications. This piece substitutes the usual 4/3 Daily Market Note and is geared towards longer-term views in nature.
As for today’s context from my pre-market note to members, I wanted to see if we could retest NQ 18200 again for a bounce. We almost got there (18230 was Low of Day), and we made a large tech bounce after ISM’s Data Release. I missed the upside move because I wanted 18200 and didn’t get it. I didn’t chase it up after being sidelined. Hope you caught it though!
Hi Everyone -
When equity markets are balancing for the next move, I will periodically use this window of time to provide further macro updates/educational guides on areas of interest. My next Educational Guide is set to be released later this week. Today’s note is a macro note on the Real Estate sector. A lot of data/graphs are shown below. As always, when it comes to Macro, these things take a longer time horizon to play out.
From a big picture standpoint, there has not yet been a severe housing market correction at the national level in the U.S. This is because the property values from the largest U.S. cities from the East and West coast have held up the Shiller Home Price Index.
But in many neighborhoods outside of the East and West coasts, home values have seen a very uneven recovery from their 2022 levels and the number of neighborhoods that are actually seeing negative equity among homeowners continue to be high (especially in the Mid-West and South).
Given that U.S. real estate is the bedrock of American Consumer wealth, an adverse shakeout in property prices will have a large impact on the “wealth effect”, leading to less consumer confidence and spending.
U.S. Real Estate has been in a long-term bull market and the strength of this asset class on long time horizons is most likely going to be a tried-and-true approach to building wealth.
However, does that mean that it is always a good time to enter Real Estate? Below, I’ll share latest data on Investor activity in the real estate sector as well as give an update on consumer credit trends, which inform the macro view on the stock market.