The last decade of monetary policy was defined by quantitative easing (QE). This was designed by the Federal Reserve and other central banks to stimulate the economy in a zero interest rate world.The mechanics of this effort entailed central banks buying up assets such as Treasuries, mortgage-backed securities (MBS), corporate bonds, and stocks, in some instances.
A lot can change in a year. At this time last year, the world was facing an unprecedented economic and health crisis. There were concerns that the loss of economic activity would affect demand which could cause the economy to go into a deflationary spiral. As a result, the central banks injected trillions of liquidity into financial markets, the federal government spent trillions to help small businesses and individuals, and companies started aggressively cutting costs to pre...

There were many reasons that the bull market from 2009 to 2020 was so durable and resilient, but a major factor was the strength of housing starting from 2012 onwards.

Rising home prices have many spillover benefits. It leads to increased employment and activity in other industries which are also labor-intensive. The wealth effect leads to increased consumer spending and confidence which is a big deal in an economy where consumer spending accounts for 70% of all activity.

So, it makes sense that investors and analysts are closely watching the housing market to see how it acts as rates rise and there are increasing fears that the economy could slow down.

But, there were also some unique factors that contributed to the housing market's strength during the last bull market. For example, the housing market was coming out of a crash, there was a weak economy resulting in rates staying low and trending lower, and undervaluation in many regions.

This time, prices have been soaring higher, and the market is plagued by undersupply, while demand is supported by demographic factors. However, one headwind is that mortgage rates have risen which is denting affordability.

In terms of the economic data, we are seeing an impact on the margins. Refinancing applications were 68% lower than the same period last year, while overall purchasing applications fell by 1...

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