Why the Housing Market Is Teetering, Explained in 6 Charts

Are you wondering what's up with the housing market these days? If so, then do yourself a favor and check out these six charts.

Apr 19, 2014 at 8:38AM


The housing market isn't healthy.

Over the past year, mortgage rates have rocketed higher and existing home sales have plummeted. To understand what's behind these ominous trends, scroll through the following six charts.

First, let's start with the most important metric of all, existing home sales. As of February, which is the latest available data, sales of previously owned homes were down 7.1% on a year-over-year basis.


Second, new home sales are also down, though not as significantly. As of February, they were off by 3.3% compared with January and 1.1% compared with February 2013.


Third, the most obvious explanation for the drop (at least in terms of previously owned homes) is that the supply (i.e., inventory) of listed properties is constrained. Equivalent to 5.2 months' worth of sales, it's well below the six-month threshold at which the market is said to be in balance.


Fourth, the dearth of supply is why home prices have soared over the past year, increasing by double-digit percentages in each of the past 11 months.


Fifth, there's also reason to believe that demand has taken a hit thanks to increasing mortgage rates. Since the end of 2012, the cost of a 30-year fixed-rate mortgage has risen by nearly 100 basis points, from around 3.3% at the trough to around 4.3% today.


Sixth, you can see the impact of this on purchase-money mortgage application volumes, which were down by 17.9% in March compared with the year-ago period.


What do these six charts mean when you put them together?

To me, they suggest that the housing market could go either way. If we're lucky, the spring selling season will cure all of this. If we're not, then it's hard to predict what we're in for.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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