TRADEX
GLOBAL INTERNAL COMMENTARY
Home prices on the move! The Case-Shiller Property Index increased
5.5% from November 2011, the biggest year-over-year gain since August
2006. Record low rates and a stabilizing
job market are both contributing to this positive growth. Home price appreciation is a key component in
our MBS Portfolio, as it affects both prepayments and loss severities. The reversal in the housing sector should
affect the overall economy and home owners for sure. We were early in seeing these trends and our
Liquid Real Estate Portfolio has benefited greatly. Keep nimble – Michael Beattie
EXTERNAL RESEARCH COMMENTARY
Home prices in 20 U.S. cities rose in the 12 months to November by the most in more than six years, showing the housing market will play a more central role in the U.S. economic expansion this year. The S&P/Case-Shiller index of property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006, according to data released in New York today. Confidence sank more than forecast in January as consumers were stung by a drop in take-home pay, another report showed. Mortgage rates near a record low will probably spur a third consecutive advance in home sales this year, which will keep property values rising. The resulting gains in home equity may help support consumer sentiment and spending, the biggest part of the economy, softening the hit from the two percentage-point increase in the payroll tax that took effect this month. “Rising home prices are providing an important cushion,” said Millan Mulraine, a New York-based economist at TD Securities LLC, who correctly forecast the gain in values. Lower confidence and smaller paychecks “will slow consumer spending this quarter, but the effect will abate in coming months.” The New York-based Conference Board’s sentiment index fell to 58.6 this month, the weakest since November 2011, from 66.7 in December, the private research group said. The 8.1-point drop was the biggest since August 2011, the month after lawmakers wrangled over how to trim the budget deficit. “The souring in moods is a reflection of the brinkmanship in Washington and the higher payroll tax,” Mulraine said.
Home prices in 20 U.S. cities rose in the 12 months to November by the most in more than six years, showing the housing market will play a more central role in the U.S. economic expansion this year. The S&P/Case-Shiller index of property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006, according to data released in New York today. Confidence sank more than forecast in January as consumers were stung by a drop in take-home pay, another report showed. Mortgage rates near a record low will probably spur a third consecutive advance in home sales this year, which will keep property values rising. The resulting gains in home equity may help support consumer sentiment and spending, the biggest part of the economy, softening the hit from the two percentage-point increase in the payroll tax that took effect this month. “Rising home prices are providing an important cushion,” said Millan Mulraine, a New York-based economist at TD Securities LLC, who correctly forecast the gain in values. Lower confidence and smaller paychecks “will slow consumer spending this quarter, but the effect will abate in coming months.” The New York-based Conference Board’s sentiment index fell to 58.6 this month, the weakest since November 2011, from 66.7 in December, the private research group said. The 8.1-point drop was the biggest since August 2011, the month after lawmakers wrangled over how to trim the budget deficit. “The souring in moods is a reflection of the brinkmanship in Washington and the higher payroll tax,” Mulraine said.
Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com
203-863-1500
@Tradex_Global
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