This is the fifth installment in an ongoing series where Marc Bautis, Wealth Manager and Founder of Bautis Financial, comments on hot topics in the financial industry.
The United States Housing Market is on Fire
Commentary co-written by Kayla Waller.
Even if you haven’t bought or sold a piece of real estate in the past year, it’s no secret that the housing market has been on fire. Bidding wars. All-cash offers. Homes selling for $1 million over asking. The housing boom has officially reached a ridiculous stage.
In May, the median price of an existing home was $350,300, up 23.56% from May 2020. The average home sold only spent 17 days on the market.
What is driving prices?
- Low mortgage rates
- Increased demand and a shortage of homes for sale
The momentum doesn’t seem to be stopping any time soon. Blackstone just invested $6 billion to buy Home Partners of America, a company that owns 17,000 single family homes and gives renters a path to buy the home they are in.
Many clients come to me, telling me that their neighbor sold their house for a crazy amount — prompting them to consider selling too. The reality is, unless you are moving to an area with a cheaper cost of living, you’ll buy a new home at an inflated price too.
However, if seniors are planning to downsize and considering renting, now could be a good time to sell — and take advantage of the inflated prices.
In Ronaldo’s Words, “Drink Water”
Influencers are usually hired by companies to increase the revenue for a product or service. Sometimes their actions, even if slight, can influence in unintended ways.
While Christiano Ronaldo is one of the most popular soccer players in the world, he holds a strong influence as he’s well-known for living a healthy lifestyle with regards to his diet and exercise. After one of the European Soccer Championship games last week, he attended a press conference. There, Ronaldo was filmed sitting in front of two bottles of Coca-Cola, with one of the tournament sponsors in front of him. Instead of drinking the beverages, Ronaldo moved the bottles to the side and held up a bottle of water. “Drink water,” he said.
I don’t know if Coca-Cola’s sales will be impacted by Ronaldo’s actions, but the market certainly thinks so — it shaved $4 billion off the company’s market cap the next day. While there were other factors impacting the stock market that day, it doesn’t help when someone with 300 million+ Instagram followers snubs your product.
Is Shopify Worth More Than Apple?
Shopify has been a hot e-commerce company whose stock price is now over $1,500/share. By comparison, Apple is $132/share. Does that mean Shopify is worth more than Apple? Not quite.
To determine which company is worth more, you have to look at their Market Capitalization (Cap) and not just the stock price. The Market Cap takes the stock price and multiplies it by the number of shares outstanding. You can think of the number of shares outstanding as the number of shares you would have to own to own 100% of the company. If we look at the market caps of Shopify and Apple, it tells a different story of who is more valuable: Apple’s market cap is $2.22 trillion, Shopify’s is $186 billion.