The Fed-fueled housing boom of 2020 is still gripping North Texas. Median and average prices in the DFW area were up 13.1 percent and 15.5 percent respectively in November. Everyone moderately attached to central bank liquidity has been busy buying up assets. Denton home prices defied normal seasonal trends last month. Median prices in the city of Denton were up 6.1% compared to last year, while average prices hit a new record high of $315,590. That translates to a 13.4% increase from November of last year. Denton County saw similar home price gains with median prices jumping 8.9 percent and average prices up 9.5 percent.

Available home inventory in the Dallas-Fort Worth area is now so low it’s eating into sales growth. DFW overall is sitting on just 1.5 months of supply. Denton County is down to a single month of inventory. Resale inventory in Denton County is down to less than one month of supply. The housing market during the past several months boils down to too many buyers chasing a limited number of homes for sale. This is why we’re seeing abnormal price increases in the middle of a stagnant economy. Typical seasonal market trends have been thrown by the wayside. North Texas home sales enjoyed another month of double-digit gains in November. Closed sales rose 21 percent, while pending sales (contracts) were up 17 percent compared to the same time last year.

Recipients of the $trillions in Fed largesse are buying up homes and property with their newfound privilege. Existing property owners, and particularly America’s wealthy, have never had it better. Recent figures show that U.S. homeowners are $1 trillion richer thanks to recent home price gains during the pandemic. Some people are opting to buy second homes. Others are simply looking for a nicer place. The exodus from California, Illinois and other high-tax states continues to fuel demand for homes in Texas. Demand for million-dollar homes is all the rage in the pandemic of 2020.

“Wealthy Americans, largely untouched by the recession and eager for more living space, have been on a homebuying binge.”

At the opposite end of the spectrum, we learned that another 1.4 million Americans filed for unemployment claims during the past week. The economy is far from fully recovered, and Covid cases are again threatening to shut down entire segments of the economy. Many federal moratoriums and programs are set to expire at the end of the month. That means millions of Americans could be looking at eviction or foreclosure without additional support from Congress. Not surprisingly, Senate majority leader, Mitch McConnell is still throwing cold water on the Democrats’ already-water-down stimulus proposals. It’s a pretty sad picture when the North Texas Bood Bank sees record lines of hungry Texans while America’s billionaires grow richer by the day.

This is the economy and housing market Congress and the Jay Powell Fed created with horribly misguided and poorly supervised Covid bailouts and stimulus. Corporate executives are raking in 7-figure bonuses and 7-figure salaries like there’s no tomorrow. Some of the biggest companies in America are laying off thousands of employees while they bilk the government for huge pandemic tax refunds. Gravity Payments CEO, Dan Price, summed up the situation in 2020.

“The airlines got a $50 billion bailout and then laid off 90,000 people. If someone can explain to me why we could only afford to give people $1,200 of their tax dollars back, I’d love to hear it. Because that was 8 months ago and it amounts to $4.83 a day at this point.”

The Federal Reserve fueled a massive rally in many company shares, enriching the executives receiving stock-based compensation. There are a lot of wealthy Americans looking to buy homes, many richer than they were before the pandemic started. The roughly 20 million Americans receiving some form of state or federal unemployment assistance are being told to wait in line for some crumbs.

“The bottom 50% get to see stimulus funds held up by a man from Kentucky they didn’t vote for and they get to watch the top 1% get ever richer enabled by a Fed who they never elected.” Sven Henrich

It’s great that many existing homeowners have been fortunate enough to capitalize on record low interest rates to keep their finances intact. Those record low rates are irrelevant for millions of Americans who can’t take advantage of them to due to their employment situation. Federal Reserve officials continue to talk out of both sides of their mouths. Powell and his Fed colleagues keep telling Americans they need to get better training and education to participate in the American dream. They are also busy pulling up the ladder to make sure that dream of upward mobility is nothing but a mirage.

Our bifurcated housing market and rampant wealth inequality continue to be huge headwinds for the U.S. economy. The incoming administration is already signaling more of the same. Biden’s pick for Treasury secretary is none other than Janet Yellen. Yes, that Janet Yellen! The labor economist and former Fed chair is already laying out some lofty goals and platitudes to solve the nations’ problems. Ironically enough, the problems she wants to fix are the same problems she helped create while heading the Federal Reserve. The next few years should be interesting on a number of levels. If you are in the market to sell a home, you can take comfort in the fact that the Fed is still providing massive support to the housing market. If you are in the market to buy a home, well…may the force be with you.

U.S. mortgage rates December 3 2020

Fed balance sheet and MBS December 3 2020

After a feeble attempt at normalizing the balance sheet in 2018, The Federal Reserve now holds more Treasury securities ($4.63 trillion) than the previous peak of that balance sheet roughly 5 years ago. The Federal Reserve is monetizing debt and enabling fiscal deficits like there’s no tomorrow.

Fed balance sheet vs Treasury holdings Dec 9 2020