Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – January 24, 2017
Despite generally disappointing data the major averages moved higher in early trade entering the final hour with modest gains. Existing home sales missed expectations in December falling 2.8% to 5.49 million units annualized. For the year 2016 saw sales increase just .7% but that was enough to push sales to a decade high. Months’ supply slipped to 3.6 lower than the year ago figure of 3.9 months. The median price finished the year down slightly at $232,200 a figure 3.8% higher than a year ago. Given how tight the market is with respect to inventory one would have thought that price appreciation would have been a little more brisk.
Prior to the 2007-2009 financial crisis more than a few pundits pushed the idea of the Dollar losing its reserve currency status to the Euro, Chinese Yuan or perhaps the Japanese Yen a rather dated idea that won’t go away. At the time I and a few others noted that the Euro had some significant structural issues namely a lack of a Federal Europe and a central monetary and taxing authority, problems that currently plague the union and others as it continues to march towards breakup. With China’s success built on a mountain of debt the likes of which the world has never seen this is all but certain to curtail its days in the sun. So it is no surprise to learn that in fact the Dollar has strengthened its position as the worlds reserve currency in the post crisis period because it remains the best looking horse at the glue factory.
The 13th Annual Demographia International Housing Affordability Survey is out with its 2017 results finding that of the top ten most unaffordable major metropolitan markets with affordability based on the ratio of median homes prices to median gross incomes, 3 are in California, #5 is San Jose with a multiple of 9.6, #8 Los Angeles with a multiple of 9.3 and #9 San Francisco with a multiple of 9.2. Number one is Hong Kong with a multiple of 18.1, Australia and New Zealand also made the list as did Vancouver Canada at #3. Also of note California featured the most expensive smaller market as Santa Cruz came in with a multiple of 11.6 trailing only Hong Kong, Sydney Australia and Vancouver Canada. Great news if you’re an existing homeowner, not so much for new families.