Stop here across the street to your right, That’s where my house lives… And now it waits there, This house that used to be my home.
– Willie Nelson, Where My House Lives (lyrics)
“Stocks stage big comeback in best Thanksgiving week since 2008” headlined MarketWatch on the month’s final trading day. Indeed the 3.7% return for the week was just enough to allow the S&P 500 return to migrate to “the green” adding .25% to its 2025 return of 17.8%. November was, in a number of ways, the mirror image of that of the “all things AI” market of October with Health Care stocks rising 9.3% in contrast to Info Tech’s -4.3% decline, the equally weighted version of the index returning 1.9%, mid-cap stocks 2% and small cap stocks 2.65%. Gold resumed its bullish ways, adding 5.4% to its year-to-date return of 60.2% with Bitcoin interestingly down 17.5% for the month.
Possibly the most interesting market is the one many of us are the most familiar with. As of June 30, 2025, the net worth of U.S. households was $197.3 trillion with two-thirds of that wealth in financial assets including $41.8 in common stocks. Of the $62.7 trillion in non-financial assets $53.2 trillion is in real estate supported by $13.5 trillion in mortgage debt, meaning that U.S. common stock equity and real estate equity wealth for U.S. households are very similar numbers. In 2024 5.4 million single family houses were purchased in this country, 75% pre-existing and 25% newly constructed. A characteristic of the U.S. residential real estate market is how expensive houses have become with prices having doubled from 2000 to 2007 and then doubling again since 2015 resulting in only 43% of U.S. households earning the $125,000 annual income required to purchase the average priced single-family home.
An additional characteristic of housing in this country is the age of the houses and those who live in them. Since 1970 the U.S. population has increased by almost two-thirds but the level of new home construction in the 1970’s and the first decade of this century were similar numbers of nine million in both decades prior to declining to six million from 2010 through 2019. The lack of new home construction has resulted in the age of the average single-family home in the U.S. rising from 25 years in 1990 to now over 40 years. 65% of American’s own the homes in which they live but only 28% of those homes are unencumbered by a mortgage. The challenges of housing affordability have been predominantly borne by the more youthful cohorts of our population as the 34 year and younger homeowners share has declined from 15% to 10% from 1993 to 2019 while those 55 and older has risen from 42% to 56%.
The housing market may already be on its way towards restoring the balance between supply and demand. Housing prices inflation adjusted have not risen since 2021. In the past two years, aided by more slowly rising prices and declining mortgage rates, mortgage payments as a share of the median family income have declined from 50% to 40%, the same level as that at the turn of the century. There is currently a nine-month supply of houses for sale, the highest level since “the housing bust” of 2007-2011. The average existing mortgage rate is 4%. The high in rates was 7% and is currently at 6%. If rates decline to 5% a very large number of houses will find their way into the marketplace as a closer match between existing and new mortgage rates becomes achievable. The affordability of homes will rise along with the demand of younger families who have been waiting for the opportunity to purchase them.
50/50 portfolios returned 1.10% for the month and are +19% year to date. Equities returned .35% and fixed income .50% with variable rate securities and precious metals outperforming both as the yield spread between 30 year and 2 year treasury rates resumed widening on hopes for further rate cuts by the U.S. Federal Reserve.
Mark H. Tekamp