The EMG Blog

SOLE SIZE – 1/17/22

In 1980, sole-person households totaled 18.2 million, 22.5% of all US households. By 2020, the number was 36.1 million and made up 28% of all households. Moreover, between 2010 and 2020, 44% of household growth was contributed by sole-person households. Between 2020 and 2030, 42% of household growth will be generated by sole-person households and they will number 41.2 million, or 29.3% of all households. Yet, house size increases! (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

DWELLING DEFICIT – 1/10/22

The US is about 5 million houses underbuilt. Here are some of the reasons why: Covid-19 has increased the desirability of homeownership. Millennials are entering peak homebuying age so demand will remain elevated for years. Anti-development attitudes make it very tough to build. Supply-chain problems and the high prices they create prevent entry level homes from being built. Households have ample wealth to spend on housing, and rates remain low. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

SOLID SALES – 1/3/22

New home sales rose in mid-2020 from a pace of 700,000/year to 975,000/year but fully returned to their 700,000/year pre-Covid pace by 5/21. Similarly, existing sales ramped up to a Covid-19 induced level of 6.75 million/year in mid-2020, from 5.4 million/year pre-pandemic, but like new sales, bottomed in 5/21 at 5.78 million/year. However, they’ve stormed back and are now at a 6.5 million/year clip despite serious inventory and price headwinds. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

RATE REDUCTION – 12/27/21

While the Fed has commenced tapering its purchases of MBS and Treasuries by $15 billion/Month, this will only very indirectly reduce inflation. It’s because inflation is being generated primarily by supply constraints, not easy money. The best solution would be to lessen regulations, even if only temporarily, that make production more costly. Tapering and eventual rate hikes will slow the economy, but global supply-chain issues are the real problem. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

RISING RATES -12/20/21

The Fed reduced the rate of its purchases of Treasuries and MBS by $20 billion/month and $10 billion/month respectively. Thus, in 3/22 tapering will conclude, paving the way for as many as three quarter-point rate hikes in CY2022, the first coming as early as 22Q2. The rationale; while supply-chain inflation will probably dissipate, the Fed does not want demand-based inflation or a wage-price spiral to get a beachhead. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

DWELLING DEFICIT – 12/13/21

The home ownership vacancy rate is 0.9%, the lowest rate since at least 1956. The rental vacancy rate is 5.8%, the lowest rate since 1984. Existing inventory is 1.27 million, the lowest October reading in over 20 years, built new inventory is at its lowest level since at least 1973, and the cost to buy a single-wide manufactured home went from $55,000 pre-Covid to $70,200. Talk about a supply problem! (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

OMICRON OFFENSE – 12/6/21

With the arrival of the Omicron variant, Fed fear of inflation has unseated unemployment as problem #1. Just as the Delta variant weakened GDP growth and worsened supply-chain problems, the fear is that a replay is in the offing with Omicron. Thus, the Fed is now likely to finish tapering by late March rather than late June and be in position to raise rates as early as 22Q2. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

CREDIT CARDS – 11/29/21

In 20Q1, mailed credit-card solicitations totaled 931 million. They collapsed to just 352 million in 20Q2, but by 21Q3 recovered and hit 940 million. Better yet for consumers, cash-back card offers hit 1.11% during 21Q2 and 21Q3, their highest level since at least 2010, while miles/points offered rose to 1.2/dollar spent, their best level in over a decade, all to find top cardholders, those with good FICOs who carry balances. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

GOVERNMENT GIVING – 11/22/21

During the 1980s, federal payments to individuals including Social Security and Medicare was 10% of GDP. From 1990 till the Housing Bust it was about 12%. During the Bust it hit 15%, but quickly fell and was 14.5% on the Covid eve. It then quickly jumped to 20%, a rise of 5.5% or $1.2 trillion! This is partly why we are now shopping like mad and why inflation is elevated. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.

PROFOUND PURCHASES – 11/15/21

Compared to 1/1/19, inflation-adjusted US purchases of services has fully recovered, great news. The problem: purchases of goods remain up by almost 20%! Apparently, Covid-19 habits die hard. The US economy is not suffering from anything resembling stagflation. Rather, we are seeing very strong growth bumping up against supply constraints exacerbated by a profound worker shortage, the causes of which are myriad, leading to sharp price increases. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

*The views, articles, postings and other information listed on this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.