lutz logo
lutz logo
  • Services
  • News & Insights
  • About
  • Client Portal
Search
  • Services
  • Accounting
  • Consulting
  • Financial
  • M&A
  • Talent
  • Tech
  • Accounting Services
Services
  • Audit & Assurance
  • Employee Benefit Plans
  • Client Advisory Services
  • Outsourced Accounting
  • Tax
  • State & Local Tax
View All
Industries
  • Agribusiness
  • Construction
  • Family Office
  • Healthcare
  • Manufacturing & Distribution
  • Nonprofit
View All
News & Insights
Website Featured Content Images-2
Blog
Are You Prepared? Financial Access Checklist for Spouses

Share this checklist with your spouse to assure you each have access to manage important financial tasks independently.

Read More
  • Consulting Services
Services
  • Business Valuation
  • Healthcare Consulting
  • Internal Control Assessment
  • Litigation Support & Forensic
  • Risk Assessment
View All
Resources
Website Featured Content Images (1)-1
Guide
What is a Comprehensive Risk Assessment?

To start managing your business's risk, you will need to conduct a comprehensive risk assessment.

Read More
Business Insights
Website Featured Content Images (2)-1
Blog
Top 3 Financial KPIs Every Business Owner Should Track

Key Performance Indicators (KPIs) can help illustrate your business’s financial health and show whether your business will turn a profit.

Read More
  • Financial Services
Services
  • Financial Planning
  • Investment Advisory
  • Retirement Plan Services
  • Pooled Employer 401(k) Plan
View All
Resources
  • Lutz Financial Blog
  • Our Team
  • Client Portal
  • Charles Schwab Login
  • Send Files Securely
Contact Us
NEWS & INSIGHTS
Website Featured Content Images
MARKET COMMENTARY
Financial Market Updates

Want to receive financial market updates straight to your inbox? Sign up below!

Subscribe
  • M&A Services
Services
  • Sell-Side Representation
  • Transaction Advisory
  • Exit Planning
View All
Resources
Website Featured Content Images (3)
Ebook
7 Factors to Consider Before Selling Your Business

We give you exclusive insights on the business sale transaction process to help you answer seven important questions.

Read More
Business Insights
Website Featured Content Images (5)
Blog
Key Items to Review During Financial Due Diligence
The due diligence phase is critical for a Buyer to better understand the Target’s business operations and the overall quality of the financial information.
Read More
  • Talent Services
Services
  • Search & Staffing
  • Outsourced HR
  • HR Strategy & Coaching
  • HR Consulting
View All
Candidate Resources
  • Job Seeker Process
  • Current Opportunities
  • Lutz Internships
Contact Us
News & Insights
Website Featured Content Images-3
Blog
5 Benefits of Using Gallup's CliftonStrengths in Your Company

Gallup’s CliftonStrengths assessment can help you identify the strengths of the people working in your teams.

Read More
  • Tech Services
Services
  • Data Analytics & Insights
  • Outsourced IT
  • Technology Strategy
  • Software Consulting
View All
Resources
Website Featured Content Images (1)-2
Guide
Introducing Data Analytics into Your Business

Integrating data analytics into your business can help your revenue grow, the organization mitigate risk, or gain insight into your business operations.

Read More
Business Insights
Website Featured Content Images (2)-2
Blog
17 Tech Tips & Tricks

We’ve listed 17 shortcuts and hacks that will help you use tech to your advantage and make your daily life a little easier.

Read More
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
Webinars & Events
Events
Register Today

Register for an upcoming event or access our library of on-demand recordings.

View All
Lutz Talk Business
PODCAST
Tune In

Subscribe today for entrepreneurially spirited episodes of witty commentary for young professionals.

View All
Resources
EBOOKS & GUIDES
Download Now

Take a deep dive into challenging business topics with these free educational resources. 

View All
  • News & Insights
  • Business Insights
  • Webinars & Events
  • Lutz Talk Business
  • Resources
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
  • About
About

Lutz is a business solutions firm for people seeking a partner to help energize and heighten economic and organizational success.

Our Company
Our Team
Offices
Careers
Internships
Contact Us
  • Contact
Client Portal

Log in to your relevant client portal to access your account, upload documents, or make a payment.

Make a Payment
Accounting Client Portal
Financial Client Portal
Charles Schwab Login
Send Files Securely
Contact Us
  • Market Commentary

Is Today's New Asset Yesterday's Liability? + Market Update + 8.22.23

SUBSCRIBE
Justin Vossen, CFP®, Investment Advisor, Principal
August 22, 2023
Is Today's New Asset Yesterday's Liability? + Market Update + 8.22.23

Last week, 30-year mortgage rates rose to their highest levels in more than ten years to 7.09% as measured by the Freddie Mac Primary Mortgage Market Survey®. As you see in the chart below, rates were barely 3% beginning in 2022, so the move has been aggressive and quick at the same time.

1-Aug-22-2023-05-05-29-9954-PM

A move that aggressive in rates makes home affordability much more difficult. Moving a 30-year mortgage rate from 3% to 7% results in a payment that is 50% higher. What defies logic is that if payments on home loans have moved up 50% since the beginning of 2022, why haven’t home prices collapsed to compensate for the higher payments?

Quite the opposite has happened to home prices. According to statistics on the realtor site Redfin.com, the median sales price for a single-family home in the United States has moved higher by 1.8% year-over-year (ending 8/17/2023) to $440,492. 

So, why are home prices stubbornly moving higher? It can be argued that it is a supply issue. Right now, according to Redfin, there are less than two months of housing supply on the market. Overall, new for-sale listings have plummeted to nearly the lowest point in years, as you see in the Redfin graph below.

2-Aug-22-2023-05-05-30-7383-PM

One would assume that with the lack of inventory and new listings, new-construction inventory would be down. Surprisingly, relative to the homes for sale, Redfin notes that new home construction accounts for nearly one-third of homes for sale. As you can see in the following graph, new-construction listings are a significantly higher portion of the overall single-family homes for sale since the late 90s.

3-Aug-22-2023-05-05-30-7407-PM

So, if new construction is higher as a proportion of homes for sale these days, it’s safe to say existing home listings must be at a paltry pace. Why is that?  The old mortgage that the homeowner had refinanced or used to purchase the home is significantly lower than market rates today. Thus, the long-term “liability” becomes a beneficial “asset” to the homeowner by keeping the current house more affordable. 

In fact, according to the National Mortgage Database, more than 60% of homeowners carry an interest rate on the mortgage lower than 4%. More than 90% of homeowners carry a mortgage rate lower than 6%. There is little incentive, other than life events, for them to sell their home with mortgage payments 20-50% lower than they would if they refinanced today.

4-Aug-22-2023-05-05-30-0792-PM

How long rates persist at these levels is currently unknown. However, we can assume that as long as rates persist at these levels, you can expect home listings to be lower, absent a major recession that forces moves and defaults. Will new home construction fill the void?


Week in Review

  • The yield on the 10-year Treasury reached 4.35% yesterday (8/21), the highest level since 2007. While the 10-year yield has risen from 3.79% to 4.35% (as of 8/21) Year to Date, the yield curve continues to be inverted as short-term yields remain higher than long-term yields.
  • Housing starts in July rose by 3.9% month-over-month to a seasonally adjusted annualized rate of 1.452 million, beating the market expectations of 1.448 million. This was 5.9% above the July 2022 rate of 1.371 million. On the contrary, data published today on existing home sales highlighted a 2.2% month-over-month decline to a seasonally adjusted annual rate of 4.07 million, coming in below market expectations for a decline to 4.15 million. Other data to be published this week includes US Services and Manufacturing PMI on Wednesday and Initial Jobless Claims on Thursday.
  • The market will be tuning into the Jackson Hole Economic Policy Symposium on Thursday and Friday as dozens of central bankers, policymakers, academics, and economists from around the world meet to discuss new developments affecting the global economy. All eyes will be on Federal Reserve Chair Jerome Powell, who is set to speak on Friday morning at 9:05 AM CT. The market will be watching closely for any further clues on the future path of the Federal Funds rate.

Hot Reads

Markets

  • Why The Era Of Historically Low Interest Rates Could Be Over (WSJ)
  • Mortgage Rates Hit 7.09% Highest in More Than 20 Years (WSJ)

Investing

  • Why Aren’t Investors Selling Stocks to Buy Bonds? (Ben Carlson)
  • If I Gave You Tomorrow’s News, You Still Couldn’t Profit (Michael Batnick)
  • The Greatest Investment Quotes (Of Dollars and Data)                               

Other

  • Who’s In, Who’s Out at the 2023 Tour Championship: All 30 Qualifiers and Where They Start at East Lake (Golf Digest)
  • Top Gun Maverick – The Scene That Gives You Chills (YouTube)

Markets at a Glance

5-Aug-22-2023-05-05-30-7401-PM

6-Aug-22-2023-05-05-30-7406-PM

7-Aug-22-2023-05-05-30-7425-PM

Source: Morningstar Direct.

8-Aug-22-2023-05-05-30-7451-PM

Source: Morningstar Direct.

9-Aug-22-2023-05-05-30-7412-PM

Source: Treasury.gov

10-Aug-22-2023-05-05-30-7439-PM

Source: Treasury.gov

11-Aug-22-2023-05-05-30-7451-PM

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

12-Aug-22-2023-05-05-30-7420-PM

Source: FRED Database & ICE Benchmark Administration Limited (IBA)


Economic Calendar

13-2

Source: MarketWatch

  • Analytical, Strategic, Consistency, Includer, Input

Justin Vossen, CFP®

Investment Advisor, Principal
Justin Vossen is an Investment Advisor and Principal at Lutz Financial. He began his career in 1997. Justin specializes in providing wealth management and financial planning services for high-net-worth families, business owners in transition, endowments, and foundations. He lives in Omaha, NE, with his wife Nicole and children Max and Kate.

402.827.2300

jvossen@lutzfinancial.com

Connect on LinkedIn

Recent News & Insights

Market Commentary
What Happened to the Recession of 2023? + Market Update + 9.19.23
The consensus view from economists entering 2023 was that the U.S. would likely be in a ...
Read More
M&A
Lutz adds Robert Powell to Omaha Office
Lutz, a Nebraska-based business solutions firm, recently added Robert Powell to its Omaha ...
Read More
Accounting
Lutz adds Kinney, Krause, and Wolf as Client Resource Assistants
Lutz, a Nebraska-based business solutions firm, recently added Samantha Kinney, Shelby Krause, ...
Read More
Accounting
Proposed CMS Lump Sum Payment to 340B Hospitals
The Centers for Medicare and Medicaid Services (CMS) is proposing a $9 billion lump sum ...
Read More
module-bg-desktop module-bg-mobile

Let’s get you where you want to go.

We work to simplify complexities, help make critical business decisions, and confidently focus on the things that are truly important to you. We embrace your business as our own to spark the right solutions and help you thrive.
Contact Us
Lutz-Logo-white
  • Services
    • Accounting
    • Consulting
    • Financial
    • M&A
    • Talent
    • Tech
  • About
    • Our Company
    • Our Team
    • Offices
    • Careers
    • Internships
    • Current Opportunities
  • Client Portal
    • Make a Payment
    • Accounting Client Portal
    • Financial Client Portal
    • Send Files Securely
    Submit RFP
TOLL-FREE: 866.577.0780 | © Lutz & company, PC 2023 | Privacy Policy
Follow us on Facebook Follow us on LinkedIn Follow us on Twitter Follow us on Instagram Follow us on Facebook