For the last two years, the residential real estate market has seen an insane demand increase.

The Covid climate ushered in a new era of remote work possibilities. Our economy was injected with over $5 trillion in stimulus cash. And so Americans flocked to the housing market, prompting an unprecedented inventory shortage.

As a result, home prices ballooned at a historic rate. Soon, bidding wars, all-cash offers, and buyer concessions defined the landscape for many homebuyers.

Today, we all know, the Fed is increasing interest rates to rein in inflation. So many believe this summer might see a cooling trend in an otherwise hot housing market.

That’s looking true from some angles. But from others? Well…

New data shows that the median home price sale hit a historic high this May, exceeding $400,000.

The Wall Street Journal reports:

“Home-buying demand continues to exceed supply, buoying home prices to new highs. The median existing-home price rose 14.8% in May from a year earlier to $407,600, a record in data going back to 1999, NAR said.

“Economists surveyed by The Wall Street Journal had expected a 3.6% monthly decline in sales of previously owned homes, which make up most of the housing market.”

While it appears there was a slight slowing of demand, the rapid price increases show no signs of stopping. According to Redfin (RDFN), almost 60% of homes sold in May were purchased above their listing price.

Areas like Austin, Texas; and Denver, Colorado are especially seeing insane housing activity. In these cities, it’s easy to expect a home to sell $100,000-$200,000 above listing price.

Yet the buyers just keep coming.

In Austin, active listings surged 146% year-over-year. In Denver, they shot up 76%.

It’s difficult to predict when this housing swell will settle to a more comfortable level. As I reported yesterday, there’s a strain on construction labor as the infrastructure bill creates new competition in the industry – despite this being a time where it should be booming.

It’s hard to say where all this is headed. But as interest rates increase, we might find an equilibrium where demand stalls and prices level off.

Unfortunately, this balancing act is becoming quite complicated. Or I should say even more complicated than it was to begin with.

They’rrrrre (Trying to Be) Great! Kellogg Splits in Three 

There certainly seems to be a trend among American businesses to switch up business as usual. It seems like just yesterday I was reporting on the Ernst & Young split, for instance. (Oh, wait. That was yesterday…)

Now another major American company is breaking apart.

Kellogg Co. (K) – the maker of major cereals you might have enjoyed this morning – announced yesterday that it plans to break into three companies. This, it hopes, will accelerate its ever-growing snacks sector while helping its namesake cereal business maintain control on supermarket shelves.

Kellogg Says the move should distinguish foods such as Chex Mix, Cheez-Its, and Pop-Tarts from cereal-aisle classics like Corn Flakes and Pops. And it intends to empower more efficient, focused brands.

“Bigness for bigness sake doesn’t make a lot of strategic sense,” said CEO Steve Cahillane. “The snacking business will have all household names with just the right level of scale. And when you don’t have the ‘conglomerate effect,’ you can get a lot more done.”

This strategy is certainly a departure from the food world’s decades-long tradition of gobbling up every business in sight. But in this economy, maybe a diet is just what the doctor ordered for overextended companies.

Especially considering how unimpressive Kellogg’s stock price has been for the last five years.

The World According to REITs 

Yesterday, I reported on American Tower (AMT) and its extended broadband prowess… impressive dividend potential… and unique positioning to take part in Biden’s new infrastructure bill.

Today, it seems you all were listening because I just came across a Market Watch article entitled: “American Tower REIT Stock Outperforms Market on Strong Trading Day.” As it notes, the stock outperformed:

• Crown Castle International (CCI) rose 3.72% to $161.96
• Rogers Communications (RCI) fell 2.64% to $60.83
• SBA Communications (SBAC) rose 3.84% to $303.24

And, “Trading volume (2.5 M) eclipsed its 50-day average volume of 2.1 M.”

Clearly, some interest was raised. Here’s to your profits rising as well!