Millennials Are Moving Home. | (12.19.22)
“Don’t worry about failure. You only have to be right once.” Drew Houston, Dropbox Co-Founder/CEO
What You Need To Know Today:
• To kick off the week we will receive the latest reading from the National Association of Home Builders (“NAHB”) Index later this morning. This index tracks a survey of approximately 900 home builders that asks responders to rate the relative level of current and future single-family home sales. An index reading above 50 indicates those surveyed have a favorable outlook on home sales whereas a reading below indicates a negative outlook. Heading into the report the market expects to see a reading of 34, ever so slightly above last month’s reading of 33.1 An improvement is an improvement, right? Hopefully, we will continue to see this figure trend in a positive direction.
TL;DR — Updated NAHB Index reading coming today. A strong indication of builder sentiment.
• According to a new survey of Americans between the ages of 26 - 41 by PropertyManagement.com, nearly 1 in 4 millennials are currently living with their parents and half of them moved in over the past year.2 The two main reasons cited for this trend were financial, with 51% saying they made the decision to save money and 39% stating that they could no longer afford rent. Further, the general trend towards multi-generational households, in which millennials live with their parents, grandparents, and other family members, has also been increasing. As homeownership costs and inflation have outpaced wage increases across the country, many millennials simply cannot afford to move out and purchase their own homes.
As a millennial, I believe some of these outcomes can be attributed to a lack of basic money management skills/knowledge. While this is completely anecdotal, my experience has led me to believe that many millennials do not even maintain a detailed monthly budget or record of what they have spent their money on. Moreover, “spending priority” often seems off in favor of instant gratification over long-term wealth building. Personally, I believe this is largely (and unsurprisingly) driven by social media and FOMO. Millennials, let’s be better.
TL;DR — One-quarter of Americans aged 26-41 currently live with their parents, with 50% of them moving in over the past year. due to economic challenges and a lack of financial literacy.
• Sam Bankman-Fried (“SBF”), the former CEO of FTX & Alameda Research, is expected to appear in a Bahamas court on Monday to reverse his decision to fight extradition to the U.S. Last Tuesday, federal prosecutors from the Southern District of New York charged Bankman-Fried with eight counts of fraud and conspiracy, and U.S. market regulators filed civil lawsuits accusing him of defrauding investors/customers. If convicted on all counts, SBF could face up to 115 years in prison.3
TL;DR — Just one week in Bahamian prison was enough time to convince SBF to test his luck in the U.S.
Chart Of The Day:
Inflation slowed in November reaching the lowest reading since December 2021, when prices had climbed 7.0% year-over-year. The deceleration in food price growth, prices of gasoline, energy services, and used cars, helped keep inflation below expectations. Core CPI (excluding food and energy) rose by 0.2% in November, down from 0.3% the previous month. YoY, core inflation came in at 6.0%, slightly down from the October reading of 6.3%. The below graph illustrates the “peak” of this inflationary cycle which reached back in July. Of course, CPI is a lagging indicator so it is only in hindsight that this peak becomes visible.
Year-Over-Year Change In CPI For All Urban Consumers In The U.S.4
TL;DR — It appears we reached peak inflation earlier than expected. Does this mean we will see rate cuts earlier than expected?
Source: National Association of Home Builders (“NAHB”) - NAHB/Wells Fargo Housing Market Index.
Source: PropertyManagement.com - “High Rent and Job Losses Forced 1 in 8 Millennials to Move Back in With Their Parents This Year.”
Source: Statista — Inflation Cools to 2022 Low in November.