Welcome to our February 2025 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.
Housing Market Hold Strong, But Buyer Demand Weakens
The housing market remains strong in terms of home prices, driven by supply and demand dynamics along with past and present mortgage rates. “Around two-thirds of borrowers are paying a mortgage rate less than 4%. This has strangled supply and pushed U.S. home values to record highs.”
However, signs of change are emerging. In December, “Nearly 73,000 homes were pulled from sale after they failed to find a buyer in the final month of last year” — marking the highest number of delisting’s since 2015. While delisting homes typically rise seasonally in December, this surge suggests deeper challenges. Compared to the previous year, the number of homes for sale last month increased by 16%, yet 2024 saw the fewest home sales in 30 years. Sellers are active, but buyers remain hesitant. The current average 30-year mortgage rate of 6.87% may have something to do with it.
Fed Officials Still in Wait-And-See Stance
The current federal-funds rate is still sitting near 4.30% and officials have no immediate plans to make any changes. The latest labor data has remained steady while inflation ticked up slightly more than expected, both big reasons why no short-term change to interest rates is seen as needed. The economy is still chugging and prices are still rising quicker than targeted. In addition to the current data, the potential changes to trade (tariffs) and the immigration policy are seen as “potential sources that could hinder recent progress on inflation.” So unfortunately for borrows, there’s no rush!
International Stocks Still Ahead
It’s still very early in 2025, but international stocks are still outpacing the US. Going into the year there was pessimism surrounding developed (Japan, United Kingdom, most of Europe, etc.) and emerging (China, India, Taiwan, etc.) markets. It’s possible the extreme pessimism has created perceived positive surprises that have helped boost prices. Additionally, the unknowns in the US with potential changes to policies under the new administration and the hit to AI and chips may have helped as well. Performance and rankings are liable to change day to day which is why we value the importance of diversification in portfolios.
Fun Little Points
- The National Retail Federation estimated a record $2.9 Billion would be spent on flowers for Valentines Day. Were YOU a statistic?!
- The Eagles victory over the Chiefs in Super Bowl LIX set a record for most unique viewers at 182.8 million. Kendrick Lamar’s halftime show also set a viewership record of 133.5 million people.
- MLB spring training will officially begin February 20th. Then, the defending champs Los Angeles Dodgers will face off against the Chicago Cubs to open the MLB season in Tokyo on March 18th and 19th. Traditional opening day with all 30 teams will be March 27th.
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