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Summit's Fourth Quarter Market Report
As we look towards 2024, it likely won’t be a year of significant economic growth with fiscal policy contractionary, and bank lending and thus the money supply contracting due to high interest rates. Importantly, consumer spending is likely to pull back because the current very low savings rate is not sustainable and must necessarily rise, and as more than 28 million borrowers have resumed payments on student loans. As an example of the financial stress on some households, the 23Q3 credit card delinquency rate was 8%, up from a low of 4.3% in 21Q3 and at its highest level since 11Q3 when we were extricating ourselves from the housing bust and the unemployment rate was a staggering... (Read More on the Economic Overview)
Across the country, active inventories remain incredibly tight, largely due to the unwillingness of existing homeowners to forfeit their low current mortgage rate and venture out into the world of 6-7% mortgages. The last quarter of 2023, at least in terms of the housing market, was particularly tough as rates hovered near 8% for much of the fall while limited inventories kept pushing prices higher. During November, after annualization and seasonal adjustment, 3.82 million existing homes sold, up from a slightly worse 3.79 million in October, and that was the weakest monthly sales activity since August 2010, during the depths of the Housing Bust. With rates now south of their October highs, existing inventory improving, albeit slightly, and new single-family construction approaching pre-Covid peaks, home sales and mortgage applications should rise. However, as a potential warning light, some 45,000 home purchases fell through during November 2023, 16.9% of homes under contract, and the highest rate since recordkeeping commenced in... (Read More on the National Housing Market Overview)
Unemployment in Colorado is 3.3% as of 11/23, up from last November’s 2.8%, after hitting a peak of 11.6% in 05/20 (for comparison, the pre-pandemic rate was 2.8%) and well below the U.S. national average, making it difficult for Colorado employers to fill positions. Statewide continuing claims for unemployment hit a high of 265,499 for the week ended 5/16/20 (compared to a pre-pandemic level of 20,735) and are now at 32,332 for the week ended 12/30/23, a year ago it was 29,038. Statewide, the December 2023 median price of a single-family home of $549,950 was 3.8% higher than... (Read More on the Colorado Housing Market Overview)
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