12/23 Santa Claus Rally
Phoenix's Market Officially Pivots, Average FTHB's Age Is Now 35, Builder Confidence Rose For First Time In 5 Months
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Read last week’s newsletter here → "12/16 And The Dow Goes Wild"
Tiger Woods has become the hottest meme template of the year. Southwest pilots are looking at a 50% pay bump. Nikola founder Trevor Milton is headed to prison. Rumors surface of Warner Bros merging with Paramount. Disney will lose exclusive copyright over Mickey and Minnie as of January 1st. And “Try That in a Small Town” by Jason Aldean was voted the worst song of 2023.
tl;dr
7/17 Submarkets experience a reverse in trajectory and lean toward favoring sellers.
The weekly CMI supply vs demand index has shown it’s first increase in 6 months.
The average mortgage rate is 6.68%
Homebuilder confidence increases for the first time in 5 months
The average first-time homebuyer age was 35 in 2023
Phoenix
There has been an average decline of 3.0% in the Cromford® Market Index for the 17 cities above over the last month. This is a big improvement over the 6.7% decline we saw last week, but the average CMI is still somewhat lower than a month ago. However the average CMI has not fallen over the past week has risen by 1% and we are now officially in a recovery trend.
Moving up over the past month, Scottsdale, Goodyear and Chandler have been joined by Fountain Hills, Surprise, Queen Creek and Buckeye. Only Paradise Valley, Cave Creek and Maricopa are still showing double-digit percentage declines over the last month.
8 out of 17 cities are still seller's markets. We have 4 cities that are balanced and 5 that are buyer's markets. Maricopa stands out as by far the weakest market of the 17 and it has yet to turn around.
The Cromford Market Index is a gauge of Phoenix’s Supply and demand metrics. 100 is considered a balanced market. Anything higher than the 100-point benchmark is considered a seller’s market. Anything below 100 is considered a buyer’s market.
As of December 22nd, 2023, the CMI has increased to 105. Up 8 basis points from 7 days ago.
Supply has decreased by 4 basis points and demand has decreased by 1 basis point.
Rates
7-Day rate change: +6 basis points
YoY change: +16 basis points
Average interest rate: 6.68%
Builders gain confidence
Builder confidence rose in December for the first time in five months as mortgage rates fell.
Builder confidence increased as rates fell roughly 50 basis points over the past month, which pushed the National Association of Home Builders’ monthly confidence index up 3 points to 37 in December, the trade group said on Monday. Builders had also kept up sales incentives to boost interest, with 36% cutting home prices.
Falling mortgage rates may provide a further boost to builder sentiment in the coming months.
The U.S. economy shows early signs of weakening with inflation finally lowering, the Fed is now signaling rate cuts.
A year ago, the index was down bad at 31.
Is gen-z doomed?
Instead of creating awful slang like “rizz”, “phantom tax” "and “skibidi” Generation-Z should really focus on their financial literacy.
The average age for a first-time homebuyer this year was set at 35. Up from 33 in 2021. For context, 45% of Baby Boomers were able to buy their first home between the ages of 25 and 34%.
This news comes as younger generations are seen as more comfortable with taking on debt such as student loans, credit cards, and buy now pay later platforms.
S&p500 vibe check
US stocks rose after US Q3 GDP growth was revised downward to a 4.9% annualized rate, keeping in line with the narrative that a cooling economy will lead to rate cuts
The Nasdaq led indices with a 1.26% gain
Meme, tweet, & fact of the week
"Jingle Bells" was the first song played in space. NASA's Gemini 6A space flight got into the Christmas spirit and made history when they played "Jingle Bells" on December 16, 1965.