Your Wednesday Blip 9/9/20

Your Wednesday Blip 9/9/20

It was a good day to be in stocks as a broad “snapback” rally pushed both value and tech stocks higher. The Dow was up 439 points at 27,940 on lighter trading volume signaling that institutions were mostly content to sit on the sidelines. IBD has officially listed stocks a “rally under pressure”. This is the first time since April they have taken a cautious stance on stocks.
What is instructive about the recent tech selloff is that it was the fastest correction in history losing more than 10% in just three days and beating the record drop set back in March in which it took six days to reach correction territory. These quick swings seem to be more common and the way to avoid the danger they pose is to plan out a financial strategy and then align your portfolio to meet your needs. By doing this you decouple yourself from the harm of trying to react to these sudden swings in the market. This is why John, Cleo and I are embracing financial planning as a “best practice” because it insulates people from the madness of the volatility.
The Mortgage Bankers Association or MBA reported that demand for mortgage applications to purchase a home rose 3% last week from the previous week and are now up a stunning 40% from this time last year. Low interest rates and demand for a single family home in the burbs are driving the trend. The average 30 year mortgage is 3.07% and 2.62% for a 15 year conventional loan. Joel “JK” Kan, an economist with MBA said there continues to be resiliency in the purchase market plus the refi market has been strong since March when rates first began to fall.
Home prices in the State of Washington hit highs recently with double digit increases in 17 of 23 counties according to the Puget Sound Business Journal. Prices were up 10.9% in king County and in Peirce Country prices were up 13.3%. Median increases of 17% or more occurred in Island, Lewis, Mason and Skagit counties. Meanwhile the total number of homes for sale fell by 45% and builders are scrambling to get projects approved. New home construction is also being complicated by rising costs of lumber and shortages of supplies. With low inventory and new home construction headwinds, housing looks to stay strong for now.

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