Pumped Home Prices

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What's Happening Today

Good morning! It's Kristin with your daily morning digest.

The S&P 500 is falling again this morning, after slipping into correction territory yesterday (that's when stocks slide more than 10% from their most recent high). Investors have been moving money from stocks to traditional safe havens in the face of rising inflation, impending interest rate hikes, and geopolitical tensions between Russia and Ukraine. Today, Ukraine moved to declare a 30-day state of emergency in response to Russian advances along its borders.

If you've taken a peek at retirement or other investment portfolios that have taken a hit recently, don't panic. Corrections are normal and regular occurrences in the market. In fact, research from financial services provider Charles Schwab shows that between 1974 and the onset of the COVID-19 pandemic, the S&P 500 had risen an average of more than 8% the month after a market correction, and more than 24% one year later.

Here at home, home prices jumped 18.8% last year, the biggest increase in 34 years, according to the latest S&P CoreLogic Case-Shiller National Home Price Index. Mortgage rates have also been rising, which isn't helping affordability (though they have retreated from their most recent jumps). As mortgage rates continue to increase, many believe that home prices will start to decline.

And if you missed our last Instagram Live conversation yesterday, you can watch it here. We spoke with host of the "Redefining Wealth" podcast, Patrice Washington, about how to enjoy and financially pay for your home in the first years of homeownership. The conversation was part of a Black History Month series dedicated to first-time homebuyers.

- Kristin

Editors' Picks

Ukraine Crisis Has Big Western Businesses Girding for Fallout From Sanctions (The Wall Street Journal)

Home Prices Soar, Inflation Makes Consumers Gloomier (The Balance)

New Tax Plan From Leading GOP Senator Would Require All Americans To Pay Federal Income Taxes (The Washington Post)

Inflation-Obsessed Investors Can't Get Enough of Commodities (Bloomberg)

Off the Charts

The S&P CoreLogic Case-Shiller Home Price Index showed home prices rose a seasonally adjusted 1.3% in December, bringing them to 18.8% higher than a year earlier. With the year now in the books, 2021 officially saw the fastest home price growth since at least 1988 when the index began collecting data, and it's not even close to the previous record of 13.6%, which was set in 2004.

Number of the Day

0.4 Percentage Point - That's how much the inflation rate would increase for every $10 rise in the cost of a barrel of oil, according to estimates by economists.

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