Financial Markets- Stocks
I recently learned that the Dow Jones is a much smaller sample size of the stock market than the S&P 500, so moving forward I will use the S&P 500 index. The Dow Jones consists of 30 large companies in the US, while the S&P 500 consists of 500 publicly traded companies and paints a much clearer picture of the stock market.
With that said, the S&P 500 started the year at around the 3800 mark and ended the year at 4697, just over 8% for the year. Most of the gains occurred in the last 45 days of the year as mortgage rates began to improve.
Financial Markets- Bonds (Mortgage Rates)
The average 30-year fixed continued to improve throughout the month of December, albeit at a less dramatic improvement than for the month of November but nonetheless a very welcomed sight. The average 30-year fixed rate ends the year nearly where it began, at around 6.6%. Just 2 months ago the average 30-year fixed was just over 8%. This improvement in rate translates to monthly savings of $450 PER MONTH! Realtors can re-adjust the client’s home search by roughly $60,000 in price as a result 😊. In 2022 the average 30-year fixed-rate mortgage shot up by nearly 3.5%. Below is a screenshot of a mortgage-backed security which illustrates the price of the bond. The rate of return to the investor is the client’s interest rate, so unlike the 10-year US Treasury, when you see the price trending up, it is a good thing, that rates are going down. With affordability improving by 15%, it would seem as though the bottom in terms of real estate transactions would be in the rearview mirror.
Southern Nevada Real Estate
Home sales for southern Nevada for the month of December completed the lowest number of transactions in a year since 2008. Just under 2,000 single-family residences, condos, and townhomes exchanged hands for the month of December, bringing the total for the year to just over 29,000 sales. Over the past 11 years, Southern Nevada real estate would average roughly 40,000 transactions in any given year, give or take a few thousand so 2023 finished the year roughly 30% below the average year over the past decade. Despite the weak number of transactions, home values held up well, and even saw a modest appreciation rate of nearly 6% from January of 2023, where the median-priced home was selling for roughly $425,000, to the end of December where the median-priced home sold for roughly $450,000. So long 2023, see you never day.
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