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Illustration: Aïda Amer/Axios
The real estate market should be experiencing a boom — but it's not. In fact, the U.S. housing market has been stagnant for the last 3 years and is beginning to turn lower, data shows.
Why it matters: Anyone who bought residential property in the last 40 years, even at the height of a bubble, has been able to count on rising home values. But those days may be over: Real estate prices have far outpaced incomes and lost their correlation to them.
Why there should be a boom: The generation that's reaching prime home-buying age is large by historic measures; mortgage rates are near historic lows; housing price growth has slowed to a standstill; the unemployment rate is the lowest it's been in 50 years; and wages are rising at the fastest pace in a decade.
Yes, but: Instead, there is a serious lack of qualified and/or interested buyers. And even with ultra-low mortgage rates, prices are not falling enough to bring in new customers.
And there's an inventory problem. Not enough affordable single-family homes are being constructed, and builders are focusing their efforts on large, expensive projects, Robert Dietz, chief economist for the National Association of Home Builders, argues.
The combination of inflated prices and overburdened Americans has translated to fewer home sales today than in the year 2000, Lawrence Yun, chief economist at the National Association of Realtors, notes.
The bottom line: The world is changing. It's "the end of the boom," Skoczek says.
The lifespans of companies on the S&P 500 are expected to continually decrease to the point that time spent on the index could drop by 5 years on average in 2030 compared to 2019, research from QAD finds.
A growing number of market analysts are voicing concerns that the repo market shock in September may have been the first signal of a wide-ranging liquidity shortage, and now those warnings are being echoed by the heads of major banks.
What's happening: Even with the Fed's commitment to pump $60 billion a month into financial markets, there still may not be enough funding because of regulations, changes to market structure, and banks' desire to keep their reserve levels high.
What they're saying: Brian Porter, president and CEO of Scotiabank, said he also is worried about the health of the so-called shadow banking sector — firms that are not banks but lend money to consumers for things like auto loans or home mortgages and aren't subject to the same regulations.
The shadow banking sector is largely private and little is known about how much money the insurance companies, hedge funds, private equity funds and payday lenders that make up the industry actually have.
Don't sleep: IIF president and CEO Tim Adams likened it to the market for mortgage-backed securities before the housing bubble burst in 2007, triggering the global financial crisis.
The British pound slipped, but was much less volatile than expected after Prime Minister Boris Johnson's Brexit deal was rejected by Parliament on Saturday.
What's happening: The pound fell about 0.7%, but remained above $1.29, near a 5-month high. Big banks in London called in extra staff in anticipation of major market moves that didn't materialize after the first Saturday sitting in the House of Commons in 37 years.
What they're saying: “There is some uncertainty about Brexit, but it may not rattle investors too much because this is not an outright rejection of the deal,” Michael McCarthy, chief market strategist at CMC Markets, told Reuters.
State of play: Parliament rejected Johnson's initial deal, but he may have the votes for a new agreement as members of the opposition Labour party as well as well as 20 former Conservatives are expected to support it.
The CME Group responded swiftly and strongly to allegations that traders were using inside information to manipulate the S&P 500 E-mini market and pocket potentially billions of dollars.
Background: A series of massive trades punched in at or near the end of trading that paid off handsomely thanks to unexpected moves from the Trump administration were detailed in a Vanity Fair article last week.
"CME Group regularly monitors its markets for suspicious activity. As it relates to the Vanity Fair article published on October 17, 2019, regarding activities in the E-mini S&P 500 futures contract, the allegations about the trading activity are patently false."
"These transactions were entered into by a significant number of diverse market participants."— Full statement from CME Group's website