As the stock market experienced its biggest one-day drop to date in 2019 last week, and continues to experience volatility, experts turn to Ivy Zelman to learn what this means for consumers’ largest asset: housing.
CNBC’s Diana Olick interviewed Zelman live during the free fall on August 14th. Following is a summary of this interview and additional insights on what stock market volatility can mean for housing.
According to Zelman, while a falling stock market is tough on investors, the plunge in interest rates is actually a good thing for housing.
“A 25-basis point decline in mortgage rates is roughly equivalent to a 3% reduction in monthly payments,” says Zelman. “Therefore, with rates dropping more than 100 basis points year to date, consumers win with a monthly payment cut of over 10% which is awesome for homebuyers.”
Additionally, Zelman said that new home sales have been more robust than the weak housing start data suggests as builders have been actively selling speculative inventory before reaccelerating production. Zelman & Associates’ proprietary new home survey which accounts for 15% of the market has shown better-than-seasonal trends in six of the last seven months, including a robust 20% year-over-year increase in July new home orders. While this is somewhat aided by last year’s easy comparisons when the market got hit by higher rates, there is no question that momentum is building in the new home market primarily at the affordable price points.
Separately, Zelman also commented on the new “iBuyer” offerings by companies such as Opendoor, Zillow, Redfin and Offerpad, which is a revolutionary, albeit in many cases more costly, alternative to the way homeowners can sell their homes, with cyclical and operational execution still unproven. Last month, Zelman & Associates released an in-depth report on the iBuyer segment which provides critical insights for investors and housing executives to understand the evolution and risk-reward profile of this still-early stage segment.
At Zelman’s Housing Summit in Boston, Massachusetts, September 19 – 20, the industry’s leading Real Estate Brokerage executives will discuss the impact of this new offering on the housing market among other topics. This year’s annual event will heavily focus on disruptive and innovative approaches to capturing value around the real estate transaction.
Zelman is CEO of Zelman & Associates, the leading Wall Street research firm specializing in housing. Every month, Zelman surveys nearly 1,000, C-Suite executives across various segments of the housing industry to maintain a pulse on current activity in order to provide investors, financial advisors and corporate executives with critical and real-time insights that can guide their investments and business decisions. Insights and analytics from these in-house surveys, and other proprietary research offerings, are available to institutional investors, corporate executives and others engaged in the financial and housing industries.
Zelman was featured in a June 7, 2019 Wall Street Journal article, “Lessons from a Rare Breed: Wall Street Bears,” as one of three analysts recognized for accurately making counter-consensus stock market calls, referencing her vocal opposition to the wide-spread enthusiasm in the mid-2000s before the housing market crashed.
More information about Zelman & Associates’ research, market leadership and partnership opportunities can be found at www.zelmanassociates.com. Requests for interviews with Ivy Zelman, other leading Zelman & Associates analysts and experts, or consultative engagements should be directed to Kim Gray at firstname.lastname@example.org.
Zelman & Associates was founded in 2007 by Hall of Fame Institutional Investor Equity Research Analyst, Ivy Zelman. The firm leverages unparalleled housing market expertise, extensive surveys of industry executives and rigorous financial analysis to deliver proprietary research and advice to leading global institutional investors and senior-level company executives.
SOURCE Zelman & Associates