BOOMING HOME SALES - Living Legacy
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SEPTEMBER
BOOMING
Live for Today and Plan for Tomorrow
HOME SALES
A
rguably the wildest consequence
of the recent pandemic is the re-
markable price boom in the U.S.
housing market—which, some might re-
member, went spectacularly bust in the
2008-9 Great Recession collapse. Today,
half of all houses put on the market are
purchased in less than a week, often for
more than the asking price. One recent
poll found that most buyers admitted to
bidding on homes they’d never seen in
person. Home prices are at record highs;
inventories are at record lows. More than
half of homes on the market have been
selling above the asking price—which
is so far above the previous record that construction industry back on its heels. ence in the accompanying table; today’s
the statistic is simply offered in isolation. At the same time, millennials—many of mortgage credit availability looks nothing
The average home price, as measured by them too financially-constrained to have like it did during the previous residential
the S&P CoreLogic Case-Shiller 20-city bought houses at normal interest rates— housing boom years.
index, rose 13.3% in a single month, fol- are storming into the housing market, That doesn’t mean that housing pric-
lowing a 12% jump the previous month. ending forever the trope of boomerang es won’t collapse at some point in the
One driving factor is historically low kids living in their parents’ basement. future. One possible trigger would be
mortgage rates, around and sometimes Does all this signal another housing a sudden rise in mortgage rates, which
below 3% currently. Investors have also bubble? Are we now destined to live would cool demand significantly. But
stepped in; they bought 17% of all homes through another Great Recession when a even that wouldn’t trigger defaults; ac-
in April, and some might relable them housing bubble bursts? Fortunately, there cording to the Mortgage Bankers Asso-
speculators who believe (as many did in are a few checks and balances on the cur- ciation, just 0.1% of mortgage loans is-
the runup to 2008) that prices have no- rent boom that were not in place back in sued this year are tied to adjustable rates.
where to go but up—forever. 2006-7 when the seeds of the Great Reces- That’s compared to about 60% during the
But beyond that, prices have been sion were planted. For one thing, lenders bubble years of the mid-2000s.
driven up by simple economics and the are no longer handing out mortgage loans
laws of supply and demand. The number like candy, with zero documentation. To-
of homes for sale fell 21% recently, near a day’s lending standards are higher even Sources:
record low that dates back to 1982. New than the requirements of the Dodd-Frank
https://www.theatlantic.com/ideas/ar-
home construction has been slow due act of 2010, which was passed in response chive/2021/05/us-housing-market-re-
to a severe lumber shortage, and we are to the financial crisis. Loans today are cords/619029/
still feeling the effects from 12 years ago, generally smaller in proportion to house
when the Great Recession knocked the values, and leverage is down on owners’ https://abcnews.go.com/US/wireStory/us-home-
prices-soar-march-late-2013-77891830
balance sheets. You can see the differ-
https://www.bloomberg.com/news/arti-
cles/2021-06-10/real-estate-prices-are-soaring-
but-there-s-no-sign-of-a-housing-bubble
4275 Executive Square,
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1SEPTEMBER
PROTECTING
Live for Today and Plan for Tomorrow
ELDER AMERICANS
T
here have been reports that stranded and needs money wired Many times, the abuse is an in-
so-called “elder abuse” in a fi- to him. side job; a caretaker or new ‘friend’
nancial context is on the rise, The newspapers offer lurid sto- will appear on the scene and con-
costing elderly Americans an esti- ries of how scammers convince se- vince a retiree to give them pow-
mated $36 billion last year alone. niors that they’ve won a big sweep- er of attorney control over the fi-
By one estimate, roughly one in stakes contest; all they have to do nances, change their will or ‘help
three older Americans has been is pay duties and taxes in order to them out’ with increasing payment
scammed in the past five years— get the payout. $25,000 later, the amounts. It is not uncommon for
what an official at the Institute scammers have stopped answer- family members to be the perpe-
on Aging calls “an elder financial ing the emails, and of course the trators. In a recent case, the chil-
abuse epidemic.” Sadly, only one sweepstakes payout never arrives. dren of a wealthy widow joined
in 44 elder abuse cases are ever In other cases, a scammer would a brokerage firm, took control of
reported—the victimizers regard get hold of seniors’ personal in- their mother’s investment account
stealing from older Americans as formation, forge their names and and set about churning it to turn
a low-risk crime. open fraudulent bank accounts, her money into their commissions.
There is now a whole dark infra- siphoning retirement dollars until The mother had to go to court to
structure of schemes to fool people there was nothing left. get back control of her own (di-
in the early stages of dementia into In a financial context, a broker minished) finances.
parting with their money, includ- might suddenly appear in the pic- The red flags are easy to state
ing investment scams aimed at ture and start high-commission but not always easy to spot: un-
people with marginal retirement trading in unsuitable investments, usually frequent or unexplained
assets who want to boost their or talk the victim into taking out withdrawals from a retiree’s bank
income, and pop-up messages on a loan on the home in order to account, ATM withdrawals by an
websites that trick the victim into increase the amount of commis- older person who has never used
downloading a virus that sends sions that could be generated. an ATM card, new “best friends”
personal information to the scam- (This, of course, is called ‘churn- accompanying an older person to
mers. Seniors are often targeted ing,’ and it is not always clear the bank, suspicious signatures on
by fraudulent telemarketing calls, when trading crosses the line to checks or outright forgery, bank
including solicitations for nonex- become an illegal activity—espe- statements that no longer go to the
istent charities or a frantic phone cially if the broker has gotten the customer’s home, a caretaker, rel-
call saying that a beloved relative is customer to sign a document he ative or friend who suddenly be-
or she may not understand.) gins conducting financial transac-
tions on behalf of an older person
continued to the next page
4275 Executive Square,
Suite 800 La Jolla, CA 92037
p. 619.684.6239
2SEPTEMBER
PROTECTING
Live for Today and Plan for Tomorrow
ELDER AMERICANS
without proper documentation, If relatives notice any of the they’re advising ahead of their own
and altered wills and trusts. Jew- warning signs, they should im- interests at all times. (Brokers and
elry or other personal belongings mediately investigate, and if they ‘vice presidents of investments’
may be growing legs and leaving need assistance, they can contact who work at brokerage firms are
the home. Adult Protective Services in their not required to live up to this high
In some cases, a friend or rela- town or state. And they should standard of care.) For those who
tive might notice that the elderly report all instances of elder finan- can no longer protect themselves,
person refuses to make eye contact cial abuse to the local police, who there should be others willing to
when asked about these issues, and routinely investigate and prosecute step in and provide that safety.
experiences shame or reluctance to fraud cases.
talk about the problem. The bottom line here is that
The American Bankers As- there are many people who can’t
sociation offers some basic tips be trusted with an elder person’s
that might help retirees protect finances. Perhaps the best protec-
themselves, like: never pay a fee tion is to find, in the elder person’s
Sources:
or taxes to collect sweepstakes or personal circle, a son or daughter
https://www.aba.com/advocacy/community-pro-
lottery “winnings,” and never rush who unequivocally has the retir- grams/consumer-resources/protect-your-money/
into a financial decision; instead, ee’s best interests at heart. In the elderly-financial-abuse
ask for details in writing and get professional world, attorneys and http://www.canhr.org/factsheets/abuse_fs/PDFs/
a second opinion. Pay bills with financial planners or investment FS_FinanElderAbuse.pdf
checks and credit cards instead of advisors registered with the Se- https://www.credit.com/blog/horror-sto-
cash to keep a paper trail, and if curities and Exchange Commis- ries-of-elder-financial-fraud-107857/
something doesn’t feel right, back sion are required to adhere to a https://solanpark.com/5-common-examples-of-
off. Feel free to say ‘no.’ After all, fiduciary standard, which means elder-financial-abuse-to-watch-out-for/
it’s your money. putting the interests of the person
4275 Executive Square,
Suite 800 La Jolla, CA 92037
p. 619.684.6239
3SEPTEMBER
READING
Live for Today and Plan for Tomorrow
RENAISSANCE
P
eople are reading more, after the political fallout that Where the Crawdads Sing, by
and we’re not just talking resulted when the Seuss estate Delia Owens and American
about tweets and instant pulled six titles from its Dr. Dirt by Jeanine Cummins.
messages on their phones. Seuss catalogue, sales of Dr. Popular adult nonfiction ti-
The Publishing Perspectives Seuss books nearly doubled tles: Too Much and Never
organization’s most recent re- in the first quarter of this year. Enough by Mary L Trump,
port shows that sales of print But printed books don’t and How to Be an Antirac-
books in the United States tell the whole story of this ist by Ibram X. Kendi. Also
were up 29 percent over the new reading renaissance. Eb- notable was a juvenile fiction
same quarter in 2020—which ooks—that is, books loaded book entitled The Bad Seed
means over 205 million books onto a smart device—experi- by Jory John.
were sold, the highest volume enced 17% gains in the year’s
of print sales since 2004. The first quarter.
biggest winner was adult fic- Among the biggest sellers
tion, up 35 percent, to 39 mil- (aside from Dr. Seuss) were,
lion units sold. Interestingly, in the adult fiction category,
Sources:
https://publishingperspectives.com/2021/04/
us-first-quarter-2021-print-book-sales-grew-29-
percent-covid19/
4275 Executive Square,
Suite 800 La Jolla, CA 92037
p. 619.684.6239
4SEPTEMBER
2021 SECOND QUARTER
Live for Today and Plan for Tomorrow
INVESTMENT
MARKET REPORT
T
he U.S. investment markets con- 62.03% gain since this time last year. in dollar terms in the second quar-
tinued to defy gravity in the sec- The Wilshire Mid Cap index gained ter, and finished the first half of the
ond quarter of the year, closing 7.40% in the quarter, for a 15.64% year with a 6.46% gain.
out the month of June—and the first gain on the year. Looking over the other invest-
half of 2021—at new record highs. As measured by the Wilshire U.S. ment categories, real estate, as mea-
This is the fifth consecutive quarter Small-Cap index, investors in small- sured by the Wilshire U.S. REIT
where the U.S. markets posted gains. er companies, experienced a 5.09% index, posted a 12.84% gain during
Everywhere you looked in a di- gain in the second quarter, which the year’s second quarter, and is up
versified portfolio, you saw gains in brings the total return up to 16.66% 22.78% since January 1. The S&P
the second quarter. The Wilshire this year. The comparable Russell GSCI index, which measures com-
5000 Total Market Index—the 2000 Small-Cap Index is up 17.54% modities returns, gained 14.67% in
broadest measure of U.S. stocks— in the year’s first six months. The the second quarter, and is now up
gained 6.49% in the second quar- technology-heavy Nasdaq Com- a remarkable 30.90% for the year.
ter, up 15.36% since January 1. The posite Index gained 11.25% in the The energy and metals component
comparable Russell 3000 index is up second quarter, and is sitting on a of the index, which is influenced by
15.11% for the first half of the year. 12.73% gain so far this year. the jump in oil prices, is up 37.62%
Looking at large cap stocks, the International investors saw their so far in 2021.
Wilshire U.S. Large Cap index has stocks rise over the second quar- In the bond markets, the rates
gained 8.42% in value in the recent ter, but not with the same bullish on longer-term securities jumped
quarter, and is now up 15.45% in the intensity that we’re experiencing from historically low rates to simply
first six months of 2021. The Russell in the U.S. The broad-based EAFE low rates. Coupon rates on 10-year
1000 large-cap index finished the index of companies in developed Treasury bonds are yielding 1.465%,
first half of the year with a similar foreign economies gained 4.37% while 3 month, 6-month and 12
14.95% gain, while the widely-quot- in the second quarter, for a 7.33% month bonds are still sporting bare-
ed S&P 500 index of large compa- return for the first half of the year. ly positive yields. Five-year munic-
ny stocks rose 8.17% in the second In aggregate, European stocks were ipal bonds are yielding, on average,
quarter, to post a 14.41% return so up 6.37% for the quarter, gaining 0.51% a year, while 30-year munis
far this year. 10.11% for the first half of the year, are yielding 1.57% on average.
Meanwhile, the Russell Midcap while EAFE’s Far East Index has Five consecutive quarters of
Index gained 8.14% is up 16.25% so returned just 1.47% so far in 2021. gains! All-time highs becoming a
far in the year, posting a remarkable Emerging market stocks of less de- routine part of the news cycle! Have
veloped countries, as represented by the markets banished volatility al-
the EAFE EM index, gained 4.42% together?
continued to the next page
4275 Executive Square,
Suite 800 La Jolla, CA 92037
p. 619.684.6239
5SEPTEMBER
2021 SECOND QUARTER
Live for Today and Plan for Tomorrow
INVESTMENT
MARKET REPORT
Of course, the answer is no. merely ‘transitory.’ Apparently in- terest rates remain low. Corporate
This investment climate is not un- vestors took the Fed economists at earnings are projected to come in at
precedented (the late 1990s come their word; a quick drop in 10-year record levels by the end of the year.
to mind), but the current invest- Treasury yields, when converted to Of course, that doesn’t mean we
ing climate is clearly far from nor- the mathematics of bond market ex- couldn’t hit some rough patches in
mal. Stock market investing always pectations, signals an expected in- the second half of the year. Inves-
comes with a certain amount of risk, flation rate of 2% or less. Of course, tor sentiment can be tricky, and
even if the risks are sometimes tem- the biggest investor in Treasuries at bull markets have a tendency to end
porarily hidden from view. the moment (to the tune of $120 bil- unexpectedly. The new variants of
Just a week ago, there were wide- lion a month) is the Fed itself, so this COVID-19 are an unknown factor,
spread concerns that the economy may be an example of a government and eventually the government will
was about to experience higher in- agency fulfilling its own prophecy. have to stop juicing the economy
flation; a 5% single month increase But elsewhere, there doesn’t seem with ever-greater amounts of mon-
in the Consumer Price Index was to be any obvious cause for alarm. ey. We ought to be able to enjoy the
the highest jump in 13 years. In- Hiring and consumer spending are gains we’ve experienced so far in the
vestors were startled, to the ex- rising, and small business owners’ year without trying to project them
tent that the U.S. Federal Reserve confidence has bounced back above out into the unknown future.
Board felt compelled to put out a its pandemic lows. Congress is
statement saying that it expected about to pass some kind of a stim-
the gain in consumer prices to be ulative infrastructure bill, and in-
Sources:
Wilshire index data: https://www.wilshire.com/ International indices: https://www.msci. General: https://www.wsj.com/articles/stock-
indexcalculator/index.html com/end-of-day-data-search markets-cruise-to-record-highs-in-first-half-
but-investors-grow-uneasy-11625072400
Russell index data: http://www.ftse.com/products/ Commodities index data: https://us.spindi-
indices/russell-us ces.com/indices/commodities/sp-gsci https://www.marketwatch.com/story/
what-the-10-year-treasury-rates-dip-be-
S&P index data: https://www.spglobal.com/spdji/ Treasury market rates: https://www. low-1-5-may-be-saying-about-inflation-
en/indices/equity/sp-500/#overview bloomberg.com/markets/rates-bonds 11625002596?mod=mw_more_headlines
Nasdaq index data: http://quotes.morningstar. Bond rates: http://www.bloomberg.com/ https://www.marketwatch.com/story/
com/indexquote/quote.html?t=COMP markets/rates-bonds/corporate-bonds/ consumer-prices-soar-again-cpi-shows-
and-shove-rate-of-inflation-to-a-13-year-
http://www.nasdaq.com/markets/indices/nas- https://www.cnbc.com/bonds/ high-11623328693
daq-total-returns.aspx
Indices are unmanaged, and one cannot invest directly in an index. Past performance is not a guarantee of future results.
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