The housing market has outpaced nearly all expectations as prices are up a staggering 17.7% over the last 12 months. Some bears said this pace has to slow and that simply put there aren’t enough buyers to keep demand boosted this high, but Goldman Sachs sees it differently. They are projecting home prices to grow at 16% over the next year. They believe millennials are just hitting their stride in the buyers market and that a woefully short supply will keep prices elevated. New home construction has been far too sluggish in the post-2008 environment as investors are skittish, but low-interest rates give many the opportunity to buy. All of this puts the U.S. at an estimated 4-million home shortage, which has Goldman extending the horizon for house price growth through 2023, projecting another 6% increase. Others aren’t as bullish; CoreLogic and Freddie Mac are projecting 2.2% and 5.3% respectively.

FINSUM: Extremely low interest rates and glimpses of inflation could prop up home prices for the time being, as excess money has tended to flow disproportionally into assets like real estate.

Privatized space launches were a hot topic in news cycles this year, with success from SpaceX and private launches of billionaires Bezos and Branson. However, space didn’t just move headlines this year, it moved bottom lines as well. Privatized space infrastructure investment drew $3.9 billion in 2021Q3, setting an annual record of $10.3 billion. Space investments are broadly divided up into infrastructure (which posted the record year), distribution, and application. Special Purpose Acquisition Companies (SPAC) were the predominant factor in space investments. The capital was raised in private markets and mergers to go public happened frequently this quarter by Rocket Lab, Spire Global, BlackSky, Momentous, and Redwire. The trend won’t stop this quarter as more deals SPAC deals are expected to place and set more records in Q4. Space investment has raised nearly $231.2 billion in private equity since 2012.

FINSUM: While a lot of major deals are done in private equity, retail investors can look to ETFs like ARKX to invest in this growing market segment.

Value stocks are usually sought after for their relatively cheap prices trading at low P/E ratios or below book values. They had been on a near decade-long losing streak that culminated in the Pandemic crisis, which drove investors to the lofty tech-based growth stocks, but things turned around for value in September 2020 but were once again stalled out by the delta variant. However, as the economy begins to once again stabilize value is coming back with a vengeance. Bankruptcy concerns and thin profit margins are no longer fears, and value is at the ultimate discount. Research Affiliates, and investment strategy firm, value is poised to return between 5-10% in the coming decade. Global vaccine rates are making progress and cyclical sectors and hence then value sectors are going to turn around the way they started to in September 2020.

FINSUM: Value’s comeback seems inevitable, the ultra-low prices are out of wack stability will see value outperforming other factors in the upcoming year.

(Washington)

Financial advisors have been highly focused on the prospect of the Biden Administration imposing a new capital gains tax rate. In particular, the abolition of the “step-up in basis” at death that inheritors currently benefit from. The popular parlance that has emerged in the industry is “death tax”. Clients generally hate this new proposal, but one of the underappreciated risks is the major liquidity risk that the rule presents. On many assets, capital gains taxes could be large—and take a large amount of cash to pay, cash that many inheritors may not have.

FINSUM: One typical example is on US farms, where land has become hugely valuable over time, but where the actual farming business runs on slim margins. This means inheritors may have high wealth in terms of assets, but little liquidity, creating a significant tax debt under Biden’s proposals.

(New York)

Active ETFs have grown in popularity, doubling in the last two years, and they are starting to reverse the 30-year index trend invented by John Bogle. Mutual fund giants such as Fidelity, T.Rowe Price, Franklin Templeton, and American Century all have opened active funds. Driving this inflow is a series of regulatory changes that protect active fund insights and make them more tax efficient. SEC regulations have allowed semitransparent ETFs to use custom baskets and move around stocks in order to not realize gains. Semitransparent ETFs have better liquidity which allows them to cut the high transactions costs of yesteryear. Some of the fastest-growing funds are Cathie Wood’s ARK Innovation, but JPMorgan’s Ultra-Short Income, PIMCO Enhanced Short Maturity and JPMorgan’s Equity Premium Income. Finally, the current environment is allowing active funds to edge out. Active funds have thematic interests that satisfy investors at lower costs than traditional funds, and pickers outperform when there is high dispersion (as there is now).

FINSUM: Active funds are cutting costs to some of the lowest levels historically and in these tumultuous times that makes them as competitive as ever.