Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.
While health insurance inflation has seen a significant decrease over the past year, there's been no substantial improvement in the affordability of owner-equivalent rent and the housing market. The disparity between the equity market and the broader economy is becoming increasingly apparent.
As per Redfin, the annual income needed to purchase a home now stands at $114,627, a 15% increase from the previous year and a 50% rise since 2020. In contrast, average incomes are climbing by only 4% per annum. To align with home prices, median household incomes would need a surge of over 50%.
The Federal Reserve's rate hikes haven't alleviated the housing supply issue. Instead, they've coincided with year-over-year credit card delinquencies reaching heights unseen since 1991, escalating more rapidly than during the Dotcom bubble and the Great Financial Crisis. It strikes as misguided to approach bonus sections with such pessimism while companies like Microsoft hit record highs, underscoring a deep-seated disconnection. Further insights on these dynamics were discussed in this past Monday’s webcast.
Learn more about the Market Situation Report written by Tier 1 Alpha.