Coronavirus Pandemic – The Second Wave in the UK has been Deadlier

Even before the emergence of the UK's variant strain, the massive surge in cases and deaths from the second wave was tormenting the country. 

Now, the faster and deadlier pace of transmission of the new strain has forced parts of the country back into lockdown. Of course, if the current vaccines from Pfizer and Moderna are effective against the new strain, it would be welcome news for the UK and other countries as the public health experts suspect that the new strain has already been incubating elsewhere. 

After an extended remission in the summer, a renewed surge hit the UK in the fall. Still, it promptly tapered in late November, allowing public health professionals to breathe a sigh of relief. Unfortunately, it was extremely short-lived. The above graph shows how vicious the December resurgence has been. The daily cases averaged a mere 4K in September, rocketing to 18K in October, and 23K thus far in December. The 7-day moving average trendline confirms the massive surge.

After the initial breakout was brought under control in early summer, the UK's daily death toll tapered to single digits, only to return fiercely in the fall, and steadily rising ever since. To put the horror of the daily death toll, let's look at the monthly averages: 21 in September, rising to 142 in October, tripling to 396 in November, and escalating further to 461 thus far in December. The most recent trend has been more horrific, as the daily tolls have consistently exceeded the 500-mark. Today (12/23), the UK registered a heart-breaking toll of 744.

Since Italy has also been hard-hit by the second wave, it offers an excellent comparative platform. Obviously, due to the very similar outbreaks, the data points demonstrate collinearity, resulting in high r-squared values. However, the above trendlines also emphasize how the UK's cases and deaths have lately been eclipsing Italy's. Needless to say, if the new strain impacts en masse, the slope will exponentiate.  

(Click on the image to enlarge)

The UK is now third on the European chart with over 2M cases and 69K deaths. Though its positivity rate has remained low, its death rate has been ticking up.

To prevent another Wuhan, it should temporarily close down all of its international passenger airports. 

Stay safe!

Data Sources:

https://www.worldometers.info/coronavirus/

https://en.wikipedia.org/wiki/COVID-19_pandemic_in_the_United_Kingdom

https://en.wikipedia.org/wiki/COVID-19_pandemic_in_Italy

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – How the US Reached 300K Death Toll

(Click on the image to enlarge)

At the outset of the onslaught, when the White House Task Force projected a high death toll of 65K, the people worldwide woke up in fear and awe. Fast forward nine months: Yesterday, the widely-followed Johns Hopkins' Coronavirus Resource site flashed that the pandemic-related confirmed death toll in the US had crossed 300K. 

Of course, we have much to cheer on today as a couple of vaccines are ready (or being readied) for mass distribution, starting with the population's high-risk segments.

Source: https://www.worldometers.info/coronavirus/

 

Unfortunately, the actual death toll eclipsed the dire predictions in no time, hitting 100K on May 22, i.e., within three months from the first fatality, forcing the public health researchers to revert to the drawing board to tweak their vastly-flawed models that under-predicted, to say the least. New York and New Jersey collectively contributed roughly 43% of the overall death toll.

  

Source: https://www.worldometers.info/coronavirus/

The rate of growth in the death toll slightly eased while reaching 200K on September 15, thanks to the newly-approved treatment drugs like Gilead's Remdesivir and Regeneron's Regn-Cov2, replacing the malaria drug Hydrochloroqueen that was initially used by many hospitals to treat Covid patients. During this phase, while the Northeast had eased, the Sunbelt caught on with a fury.

Source: https://www.worldometers.info/coronavirus/

The above graphs demonstrate how the death rate lately has been accelerating, with a backward-bending tilt. Like the way we reached the first 100K deaths in just three months, we achieved the same distinction during the recent phase as we reached the 300K mark, despite all of the advancements in treatments and logistics.   

Now that the vaccines are here, hopefully the next milestone will be unremarkable.

Stay safe!

Data Sources:

https://www.worldometers.info/coronavirus/

https://coronavirus.jhu.edu/map.html

https://en.wikipedia.org/wiki/COVID-19_pandemic_in_the_United_States

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – The Second Wave in Germany Worsens by the Day

While the initial outbreak in Germany was not as dreadful as the other hardest-hit countries in Europe, such as Italy, France, Spain, or the UK, the ongoing second wave has been awful, both in terms of the number of cases and death tolls. 

During the mid-summer month of July, when the pandemic was in remission, the daily cases averaged a meager 466. With the advent of fall, the pandemic returned in full fury as the averages started rising: 1,561 in September and 7,404 in October. Then, November (though 12/5) turned more horrific, and the average rocketed to 18,137, a whopping 39-fold increase from dormant July. The cases exceeded 20K in each of the recent three days. 

Likewise, the daily deaths averaged a mere five in July, rising to 31 in October, and soaring to 230 thus far in Nov-Dec. The fact that the daily tolls have consistently exceeded 400 in recent days and new weekly highs are being recorded perhaps points to a bleak winter until the vaccines are widely available and accepted. The 7-day moving average trendline also confirms the rapidly rising trend, despite the weekend reporting anomalies. 

The regression graph shows that the death rate subsided in the summer, falling significantly below the linear trendline. Unfortunately, as the fall arrived, it promptly turned into an exponential trend, meaning the death rate has been far surpassing the growth in cases. The exponential trend's r-squared value is 0.971 (not shown), which handily beats the r-squared value of the linear trend.

Though Germany has registered over 1.2M confirmed cases, it's still number eleven on the chart, well below the five worst-hit European countries, both in cases and deaths. Moreover, it has one of the lowest death rates globally, coupled with a low positivity rate. Despite the surge, its active status has been well-managed at 27%, while France records at 90%. Surprisingly, its population testing credentials have been lagging behind those of its neighbors.  

Given the surging wave, Germany needs to authorize the emergency use of the available vaccines from Pfizer and Moderna. 

Data Sources:

https://www.worldometers.info/coronavirus/

https://en.wikipedia.org/wiki/COVID-19_pandemic_in_Germany 

Stay safe!

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – The US faces a Massive Second Wave

The ongoing second wave of the pandemic has been fast and furious. Case in point: At the initial stages of the onslaught, the scientific community had projected the death toll to be around 65K; today, it stands at 276K. Similarly, at the tail-end of the initial surge in June, there were roughly 2.5M cases, exploding to over 14M as of today.

After a remission of the initial surge between July and September, the second wave hit the US. It initially hit the Sunbelt, extending into the middle corridor and on to the Northeast in recent weeks. While the daily cases averaged 38.959 in September, it escalated to 58,743 in October, rocketing to 139,702 in November. The 7-day moving average trendline amply confirms the explosion.  

Though the daily death toll has steadily risen during the second wave, the growth rate has been significantly lower than the initial encounter. For instance, the daily deaths averaged 761 in September, flat-lining in October to 746, and escalating to 1,176 in November. While the recent jump is significant, it is 1.5 times the September toll, compared to 3.6 times in case surge.

The above regression graph makes a case for the tapering death rate. Since the case surge has been outpacing the death rate, the line of best fit has been logarithmic with an r-squared value of 0.981, exceeding the r-squared value of 0.962 from the linear fit. The slope also demonstrates that the death toll has started falling after the intersection point of 10M cases and 205K deaths, forming the logarithmic (curvilinear) tilt.

(Click on the image to enlarge)

Though the US owns 22% of the world's cases and the highest population-case rate in the western world, it has a lower death rate than the worldwide average. Despite a higher positivity rate than most of Europe, it has one of the world's best testing credentials. Due to the on-going second wave in Europe and the US, the active rates continue to climb, whereas the Latin American countries have experienced significant drops.

(Click on the image to enlarge)

In the US, Texas, California, and Florida have been the three hardest-hit states, followed by Illinois and New York. The severity of the initial jolt keeps New York in the top five, with the highest death rate in the country. Lately, Wisconsin has seen a big jump in positivity rate, though Texas, Georgia, and Pennsylvania are also rising fast. Pennsylvania has one of the worst testing records as well.

Today, the US recorded the highest daily death toll of 2,611. Hopefully, Pfizer and Moderna will receive the Emergency Use Authorization (EUA) later in the week so the vaccination could start.

Stay safe!

Data Sources:

https://www.worldometers.info/coronavirus/

Wikipedia -- COVID-19 pandemic in the United States

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – Stock Market Milestones: Dow 30K and Nasdaq 12K

Though the major stock indices, including Dow and Nasdaq, fell sharply at the onslaught of the pandemic in March, they have made a spectacular turnaround since then, hitting new all-time highs. Dow reached a historic 30,000 milestone while Nasdaq crossed 12,000. 

After swooning to 18,592 on 3/23 from a February high of 29,551, Dow continued its steady upward swing until 9/1 when it hit 29,101, coming very close to the previous high. It went through a mini-correction in September, falling to 26,763, creating a good re-entry opportunity for the new investors and those who buy the dips. On 11/16, when Pfizer announced its awe-inspiring Phase-3 vaccine results, the index eclipsed the February high, and on 11/24, it crossed the historic 30,000 marks and recovering 11,454 from the March lows.

Though the Nasdaq's story has been similar to that of Dow -- plummeting in March as the pandemic gained momentum -- it has shown more strength since the beginning of the recovery, trending more linearly than the Dow.  For instance, on 6/18, Nasdaq surged past the February high of 9,817 and hit 12,056 on 9/2, making a historic comeback and achieving such momentous feats well ahead of Dow.  

The above regression scatter shows how Nasdaq had outperformed Dow after the intersection point of 26,000 and 9,500. To put it in proper perspective, during the recovery period between 4/1 and 11/25, Dow has bounced back 32%, while Nasdaq has jumped 53% -- a stunning 20% spread, which is why the r-squared value has been a moderate 0.588, rather than the usual lockstep value of 0.90 and above.

Here is a look at the market achievement from a more humane perspective: The pandemic made the rich significantly richer, while the poor further regressed with more all-around devastation, paving the way for a more rapid widening of the ever-expanding wealth gap.

To save the poor and middle-class from the cyclical downturns and future calamities, we need to introduce Universal Basic Income (UBI) as soon as possible so that they can also cheer the Dow 40,000 in chorus. Right now, they are just silent spectators, worrying about money for rent and utilities. Worse yet, in poorer countries, millions of children are going to bed hungry while their mothers are starving.

What a spectacular achievement!

Stay safe!

-Sid Som

homequant@gmail.com

Post Pandemic, College Students Need to be More Careful about Career Path

Since millions of people have been laid off and are looking for jobs, college students are petrified today about their future. They need meaningful guidance and counseling in choosing the right curriculum, leading to a labor force-friendly career path. 

Here are ten basic suggestions they should consider in deciding on a risk-managed college education that will eventually help them build a forward-looking career path.

#1 STEM Education: The current college students should avoid all cop-out business and humanities majors, concentrating on STEM education or healthcare sciences, which the job market demands. They should also negotiate free tuition, at least for the coursework involving the major. Those who are starting out with the right academic credentials but are ineligible for financial aid should ask colleges to buy down their student loan rates, which may involve some shopping around, but the effort could be rewarding. 

#2 GRE Score: Whether they plan on master's education or not, they should prepare and score well in GRE, which could be an excellent pre-marketing tool as their resumes will stand out, narrowing the competition down.

#3 Internships: College students should take advantage of all meaningful internships, even if they are unpaid, and pour hearts into their assignments while building good professional relations with internship supervisors and other managers they interact with. Smart internship work often leads to hiring after graduation. The internship manager could also be an excellent professional reference on the resume.

#4 Campus Interviewing: They must take campus interviewing extremely seriously as these jobs are usually geared towards recruiting new graduates, i.e., not in direct competition with those already in the labor force. While preparing for those interviews, they must pay special attention to three primary issues:

1. Possess sound knowledge of the company they are interviewing with.
2. Not fall into the trap of talking about their negatives.
3. Be ready with 3-4 brilliant questions that would wow the interviewers. 

#5 Resumes: While a one-page resume is ideal for applying for jobs, including campus interviews, the senior-year students should have their amplified resumes stored on personal websites, the links of which should be indicated on the one-pager. Additionally, to enhance their self-image, they should design and develop the websites themselves, using self-directed sites like Bubble, which will also help keep costs down. Do they need any before interviewing with their targeted companies? 

#6 Match Practice: Instead of ignoring the companies they are not interested in, they should accept and use those interviews as match practice to prepare for the targeted interviews. They must, therefore, take match practice very seriously to get the most out of the targeted interviews. The more match practice they get, the more prepared they would be for the targeted interviews.

#7 Social Media: As employers tend to investigate the candidates' social media accounts to find out more about them, they must know there is no room for a lack of judgment in social media. On the other hand, their social media postings should complement their resumes. They must not expose any political bias either. Companies want the best and brightest employees, not a bunch of political mouthpieces. 

#8 Part-time Jobs or Day-trading: If they need to supplement income, they should try to zero in on part-time jobs that also complement their career path; for instance, while pursuing a career in nursing, one should look for a job with an insurance company -- say a private workmen's compensation insurance -- which most mainstream nurses might not be interested in. It becomes a win-win situation. As far as day-trading is concerned, it should be a no-no, as it is very stressful.

#9 Healthy Lifestyle: College students should maintain a good diet and exercise regimen to stay healthy and boost energy. There is no room for smoking and drinking alcoholic beverages in student life. 

#10 Dating: Though controversial, all college students should try to refrain from dating during the first two years of college, preferably until they complete a college education. Relationships breed a lot of stress and tension, not conducive to top-line performance. Most aspiring students should take it seriously, at least in the first two years of college. 

Stay safe!

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – Mexico Registers Two Sad Milestones

 

Source: https://www.worldometers.info/coronavirus/

As we all know, Brazil and Mexico have been the two hardest-hit countries in Latin America. Lately, Mexico reached two somber milestones: One million cases and a hundred thousand deaths. The relationship exhibits the horror behind the numbers, meaning while the worldwide pandemic death rate has been a mere 2.4%, Mexico faces a whopping 9.8%, one of the highest globally.

The above graph shows that Mexico's daily cases have been gradually trending up after tapering in late September. The July average was 6,429, dropping to 4,789 in September, but promptly reverting up to 5,089 and 5,314 in October and November. Today, Mexico has registered a new daily high of 9,187. Even the daily death tolls have started climbing; for instance, the July daily deaths averaged 606, falling to 441 in September and moving sideways since then, with the November average of 451.

The regression reveals how the rate of daily deaths has been outpacing daily cases after the intersection point of 5,500 cases and 400 deaths. In other words, the scatter shows the cluster above the linear regression line is significantly heavier than its counterpart below the line. Though the angle remains at 45 degrees, the scatter's lack of tightness results in a low r-squared value. Of course, the r-squared value rises significantly between the 5th and 95th percentiles of the death rates.

(Click on the image to enlarge)

Though in terms of totals cases, Mexico is number eleven globally, its death rate eclipses those of the top ten by a factor of three. On the other hand, Argentina, Brazil, and Colombia have been registering rates below three percentage points. Mexico also has one of the world's highest positivity rates, making the pandemic all the more devastating for the ordinary people. Atop that, Mexico has the worst testing credentials in Latin America. 

Sadly, the gradual rise in both cases and deaths does not bode well for Mexico, considering the entire winter is ahead of it, and vaccines are at phase-3, at best. 

Stay safe!

Data Sources: 

https://www.worldometers.info/coronavirus/

Wikipedia COVID-19 pandemic in Mexico

-Sid Som

homequant@gmail.com

Coronavirus Pandemic – Instead of a Lockdown, We Need More Meaningful Socio-Economic Measures

While mitigation measures are critically important in public places during a pandemic, it's debatable if a total lockdown helps save more lives than just a set of meaningful socio-economic restrictions. I believe that the former would do more harm to the physical and economic lives than the latter. Then again, such restrictions must not only be well thought out but also be uncompromisingly implemented. 

Here are five basic socio-economic ideas that can hopefully help strike a balance between the two opposing spectrums.

#1 Relocating Sit-down Dining and Movie Theaters to roof-tops of commercial buildings, including multi-story parking structures. The operators need to buy or lease air rights. To weatherize the place, all the operator has to do is install a retractable or permanent metal roof and durable awning windows around the existing parapets, with some cosmetic changes or upgrades. The sitting arrangement should have a social distancing built-in. The restaurants currently located inside hotels can also consider relocating operations to the hotels' roof-tops, thus enticing at least the hotel residents to dine in. Even after the pandemic, this concept might retain significant economic value. Religious congregations could follow this format until the dust settles.

#2 Converting the Cruise Ships to Passenger Ships. It may take years before the cruise lines recover from this doldrum (see the picture at the bottom of the post), so the cruise operators may consider making a navigational change to an old-fashioned passenger ship to avoid having to scrap the fleet and layoff the entire crew. The ship operators need to open up the three upper decks for more open-air space and install more technologically advanced internets so the passengers can comfortably perform office work while traveling. Unlike cruise lines, the ticket prices should include only breakfasts, letting passengers pay for the other meals according to their choice. To start with, the operators can try the US-Europe and US-Caribbean routes. Of course, they must initially qualify for the stimulus money to make the switch. This switch may have long-term economic value. It would be a great alternative to international air travel, especially for those afraid of air travel. 

#3 Switching to Solar Roofs. It's about time that our homes are more energy-efficient, switching to eco-friendly roofs with solar panels. Post pandemic, a sizable percentage of new homes should be built with all-solar panel roofs. Even when the existing houses with traditional roofs constructed with shingles, metal, concrete tiles, etc., require new roofs, homeowners should be encouraged to switch to all-solar panel roofs. It will not only save homeowners a ton in energy costs but will also be environmentally cleaner. It will also give a significant boost to the economy. This move should primarily be funded by the infrastructure stimulus, which is way overdue. Both existing and new homeowners opting for it will get a sizeable tax credit.

#4 Reinventing Student Loans and Phasing out H1-B Visas. We need a 5-to-7 year moratorium on all student loans except STEM education to make our education more labor-force friendly. In addition to STEM, the renewed student loan programs should include para-medical and counseling services like nursing, physical therapy, family counseling, etc. All financial aid must also go to those students only. Even the new STEM teachers will be big beneficiaries. Meanwhile, we have to gradually phase out the H1-B Visas -- preferably in the next five years -- to protect our new STEM graduates from the highly unfair foreign competition. Therefore, by the time these new STEM students graduate, the new H1-B would be non-existent. 

#5 Introducing Universal Basic Income (UBI). The federal government must introduce UBI to protect citizens, especially the poor and middle-class, from unprecedented calamities in the future.  The government needs to introduce a middle-class friendly, progressive consumption tax on durable goods at the national level to fund the proposed UBI. For instance, a middle-class family spending $3,000 on a pair of washer-dryer will not pay this additional sales tax, but a wealthy family spending $15,000 on a smart pair will pay this extra federal sales tax. Additionally, the introduction of UBI will help replace the existing welfare system, including Medicaid, paving the way for "Medicare for All" economically feasible.

It's high time that we think a little outside-of-the-box to avoid much socio-economic misery tormenting humanity.

Stay safe!

-Sid Som

homequant@gmail.com 

https://www.insider.com/abandoned-scrapped-cruise-ships-illustrate-struggling-industry-2020-11

Coronavirus Pandemic – Italy faces a more Horrific Second Wave

The on-going second wave of the pandemic in Italy has been more horrific than the initial one, requiring renewed lockdowns in the hardest-hit areas, especially tourist hot spots. Unfortunately, the rising death tolls have forced the extended death curve to form into a classic bi-modal one. 

(Click on the image to enlarge)

The above graph depicting the daily cases' full-spectrum tells the story the country has been facing. Here is how the second wave compares with the initial one. At the peak of the initial surge in March and April, the daily cases averaged 3,470 and 3,322, respectively, tapering exponentially to 888 and 263 in the following two months. As the second wave began in September with a daily average of 1,522, it promptly escalated to 11,760 in October. It rocketed to 32,940 in November, which is a whopping 9.5 times higher than the initial peak.

 
 

Despite being in a significantly better treatment environment now, the renewed death curve is fast becoming comparable to the initial one. For instance, during the initial wave in March and April, the daily death tolls averaged 413 and 518, respectively. Though the November average has jumped to 478, it has been escalating daily, with the toll jumping to 753 today and 731 yesterday.  

The regression between the daily cases and daily deaths during the second wave portrays the rising horror. The trendline has become exponential after surging past the intersection point of 25,000 cases and 200 deaths. Therefore, the linear trendline's r-squared value (not shown) is much lower than the r-squared value of the exponential trendline indicated here. As the scatter reveals, the daily deaths have started to further exponentiate after exceeding the 32,500/400 inflection point.  

On 3-31-2020, Itlay was number two worldwide, with 106K cases and 4K deaths, dropping to number six at the end of May with 231K cases and 33K deaths. The extended remission between the surges helped Italy move down to the number ten position (as shown above), although the recent explosion has spiked the caseload up to a massive 1.27M and deaths to 47K. 

The fact that the entire winter is still ahead and the mass distribution of vaccines is at least three months away makes the scenario all the more problematic for Italy, if not mostly grim. 

Stay safe!

Data Sources: 

https://www.worldometers.info/coronavirus/

https://en.wikipedia.org/wiki/COVID-19_pandemic_in_Italy

-Sid Som

homequant@gmail.com 

Coronavirus Pandemic – As New Frontrunners Emerge in Covid-19 Vaccine

 

(Click on the image to enlarge)

Though over two dozen companies are developing the Covid-19 vaccine, only ten companies are considered the frontrunners as they are already conducting the Phase-3, or at the very least, the Phase-2 trials.  

Among the ten, seven are well-established American and European multi-national corporations (MNCs). At the same time, the other three -- BioNTech (BNTX), Moderna (MRNA), and Novavax (NVAX) -- are mostly momentum companies, gaining significant notoriety in recent months for success in initial trials leading to this vaccine. To put the comparison in a proper perspective, let's compare the annual revenues: Johnson and Johnson's (JNJ) $80B vs. Novavax's $19M, Pfizer's (PFE) $51B vs. Moderna's (MRNA) $60M, and Merck's $47B vs. BioNTech's (BNTX) $122M. 

The only reason the momentum trio has been cited alongside the seven MNCs is their recent ascendence in the Covid-19 vaccine trials. Of course, BioNTech has been partnering with Pfizer, perhaps making it a much safer momentum player. 

As expected, the above correlation matrix shows how the trio shares high correlations among them but low to negative correlations with MNCs depending on the annual performance; for instance, while the trio has negative correlations with Glaxo and Eli Lilly, it has moderately high correlations with the better-performing MNCs like AstraZeneca, Pfizer, and Sanofi. 

(Click on the image to enlarge)

The momentum trio has registered significant gains this year: Novavax 589%, Moderna 201%, and BioNTech 100%. Among the MNCs, AstraZeneca's (AZN) 31% return is the highest, followed by Pfizer's 22% and Sanofi's (SNY) 19%. Glaxo's (GSK) 3% and Eli Lilly's (LLY) 4% are at the bottom. Most of the MNC gains have come in November as the investors are now betting on better-than-expected Phase-3 data.

(Click on the image to enlarge)

In the last two months (since 09/15), BioNTech (58%) and Moderna (34%) remain the two standout winners, while Novavax collapsed (-12%), leading to a negative correlation between Moderna and Novavax. MNCs have generated low to negative (+/-5%) returns, so their correlations remain elevated. Surprisingly, AstraZeneca's prior 0.23 correlation with Glaxo has now jumped to 0.90.

On the heels of last Monday's (11/9) great news from Pfizer, i.e., 90% effectiveness on Phase-3 trial, the market may see a new flight to quality, as investors rotate capital from the high-flying momentum stocks to the MNCs. 

Stay safe!

Data Source: Yahoo Finance and Macrotrends

Disclaimer: The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA, or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.

-Sid Som

homequant@gmail.com

Post Pandemic, Home Ownership will require New Incentives, Promotions and Protections

Post pandemic, federal and state governments must provide additional protections and incentives to American citizens to buy primary residences. In doing so, retirement savings and investment in primary residence must be promoted simultaneously and economically interchangeably.

1. Restrictions on Foreign Home Ownership -– Since there is a real shortage of affordable homes in the US, foreigners must not be allowed to penetrate that segment of the housing market. Ideally, foreigners should be allowed to compete for the expensive-to-upscale homes only. Of course, that sector varies from market to market, so each state should regulate the price level and the corresponding inventory. Upon approval, the MLS and other sales agencies should allow the listing of those homes, clearly specifying "Open for Foreign Buying." Again, while the foreign buyers should be allowed to buy American homes, they must be prevented from competing for the inventory that the middle-class Americans demand. Since credit reports may not be available for them, a meaningful vetting process must also be established.  

2. Penalty and Tax-free use of Retirement Funds -- One of the primary obstacles to homeownership for the younger generation has always been the access to the required down payments and closing costs, which the primary mortgages do not finance. To incentivize the younger generation into buying primary residences, they should be allowed to use funds from their IRA, 401(K), Pension and Deferred Compensation plans totally penalty-and tax-free to finance down payments and closing costs, which will simultaneously incentivize retirement savings and homeownership. Since most 401(K)s also come with some employer matching, the required down payment accumulation will be further accentuated.  

3. Introduce Million-dollar Home Sales Surtax -– Since the upscale and expensive homeowners would be a big beneficiary of the phase-out (followed by no property taxes), the million-dollar home sales must be subjected to additional progressive surtaxes. It must not be a one-size-fits-all blanket rate; instead, it must be progressive given the savings – for example, sale price $1M to $2M @2.00%, $2M to $3M @2.25%, $3M to $5M @2.50%, $5M to $10M @2.75%, $10M+ @3.00%, etc., etc. While eliminating property taxes will make the high-end housing market more liquid, the introduction of sales surtax (coupled with higher short-holding transfer taxes) will gradually de-incentivize gamers, stabilizing this volatile segment. 

4. Higher Transfer Taxes for Gamers and Flippers -– At the point of sale, shorter holding periods (say, up to 2 years) must carry much higher transfer taxes, so the traders and flippers are separated from the homeowners. It's a clear moral hazard case when primary homeowners and gamers are treated alike by the local assessors. While gamers are entitled to compete and buy, they must be treated as investors if they sell within the shorter window. Of course, certain consumer exceptions (e.g., job-related relocation, medical emergency, etc.) must be factored in as long as the use of home as primary residence could be proven. 

5. Higher Sales and Transfer Taxes on Income-producing SFRs –- In terms of sales and transfer taxes, single-family homes occupied as primary residences must be treated differently from investor purchases for conversion to rentals. At the point of sale, those investors must pay higher sales taxes (add-on sales surtax). During the last recession, many institutions bought and converted millions of single-family homes into rentals creating a whole new "SFR Rental" industry. Unlike people's primary residences, these are income-producing properties and must be treated as such. Even during the years of property tax phase-out, they must be treated as a sub-class of the multi-family and must pay higher sales, property, and transfer taxes than the primary residences.

Stay safe!

-Sid Som

homequant@gmail.com

Link to the Book