According to a recent TD Ameritrade and Charles Schwab survey, concerns about potential bubbles in US stocks and the real estate market have become major concerns for traders looking into the second half of 2021.
More than 80% of the 500 traders surveyed said housing and stocks were likely to already be in a bubble.
“Your days back to work in the office may be different,” Kinahan said of the next few months as the pandemic threat eases, though he also expects most businesses to remain cautious about it. to call everyone day ”, at least the following year.
Instead, such policies are likely to “come and go,” he said, until companies find out where they land on flexible working arrangements.
But until workers have more clarity on the flexibility of employers, Kinahan said it was difficult to guess how badly home prices were in suburbs, rural towns and hot-weather destinations that “ exploded completely ”during the pandemic will resist.
“The test, now, is that these areas will hold their values as we move forward,” he said. “Will people’s lives be flexible enough?”
The potential foam talk comes as home prices climbed 13.3% in March from a year earlier, the highest annual gain since December 2005, according to a gauge, highlighting the large imbalance between l supply and demand for housing in the United States.
Goldman Sachs analysts pegged home prices in Boise, Idaho at 29% higher in April from a year earlier and 17% in Phoenix, while also forecasting base price growth houses by 6.8% in 2021 and 3.9% in 2022.
“I don’t think it’s a bubble everywhere,” Randy Frederick, vice president of trading and derivatives at Charles Schwab, said during the briefing. “But when you hear that prices go up as low as 20% in some cases, and even 100% year over year, that’s clearly a problem.”
But Frederick also pointed to other factors at play, including the skyrocketing HG00 copper,
and wood LB00,
prices due to pandemic supply chain bottlenecks, which may ease over time.
Lis: Why so many raw materials, including lumber and iron ore, have reached record levels
“Before, you could build 10 houses for the same price of lumber as you can build two today,” Frederick said.
On the flip side, the pandemic has also shown that many people who “work on a computer” can live almost anywhere, rather than having to flock to big cities to find jobs.
The trend could cause homeowners to move back to a hometown, closer to aging parents, or even more rural and affordable settings, he said.
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“Yes, there are some parts of the country where I think the prices have gone up too fast,” Frederick said. “They’ll probably come back down. They will probably stabilize in other areas. “
Factors that could keep prices high include the current housing shortage, as well as the flood of investors looking to buy homes to rent for income.
On the financing side, however, 30-year mortgage rates that hit record lows earlier this year have skyrocketed, to around 3% at last check. The Goldman team expects rates to rise even further, to 3.2% in June and 3.3% by the end of the year.
This compares to a 20-year national average of almost 5%, according to LPL Research.
“I don’t think we’re looking for a wholesale housing collapse like we’ve seen sometimes in the past,” Frederick said. “But I think a lot of these things are going to be a bit hectic, probably for the rest of this calendar year. “
For equities, it could be a bumpy summer as volatility can rise as volumes typically decline during the most popular holiday months.
L’indice S&P 500 SPX,
et Dow Jones Industrial Average DJIA,
ended slightly lower on Tuesday, but still within 1.5% of their record close in early May. Both have jumped about 85% from their March 2020 bear market lows, according to Dow Jones Market Data.
“It’s no surprise that people feel like we might be in a bubble,” Frederick said. “But remember, we were coming out of the fastest, fastest bear market in history. “