So we're already in this stage of the economy where it feels like everything is fragile and we're seeing a new COVID way of approaching here. As we see two upcoming holidays, Thanksgiving and Christmas, and a possible increased spread of COVID.
So we're seeing increased hospitalization rates with COVID. So not just increased testing, that's creating increased confirmed cases but actually increased hospitalization. People are afraid of this new wave. That's becoming more and more apparent here as we're approaching the end of 2020. And we want to see how does this actually impact the housing market.
Now, this is not going to look like April, and the reason why as we've been here before, see when we were in April and the COVID shutdowns were first happening, the market reacted wildly to it because it was fearful of what was going on. Okay. So since we've been here before. Everybody is a little bit more familiar with how this looks, especially with how the economy is going to look with an increase in COVID hospitalizations.
So we have to understand that the market is largely driven by fear. So in the very beginning of the year, when the fear was most apparent, that's when we had this big change, we had tighter lending restrictions and we saw a lot of stress put on the financial markets. Now, since there's a lot less fear.
Along with us. It's we've been here before. We've seen a couple of these waves come and go. There's less fear around. So largely I don't anticipate we're going to see a crash happening because of this wave of COVID.
This is also being driven by the fact that we have promising vaccine news coming. And it looks like a vaccine might be made soon. Nobody has been able to put out definite numbers on that yet, but we have promising news about a vaccine.
The demand is still incredibly high. So the amount of demand for how little inventory there is is wild that's what's keeping home prices up and keeping this market-moving is the fact that builders have not been able to catch up with the demand and we're seeing a lot more buyers coming out.
Interest rates are higher than we might see things slow down a little bit more, but the federal reserve has committed to keeping interest rates low by doing measures such as lowering the overnight lending rate and purchasing mortgage-backed securities, to keep everything lower and to keep the economy going amidst all of the pandemic chaos.
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So let's dive into some of these numbers. So we can understand what's happening in this market. So right here, this is the financial stress index. It's basically showing us how much stress is being put on financial markets. Overall, this is showing us what's happening to the economy in general.
So we can see when COVID was first really becoming apparent in the US, we had a ton of financial stress happening. Obviously, we had a ton of financial stress happening in the very beginning. But again, as this fear began to subside, the stress started lowering and where we're at right now is actually an incredibly low point in financial stress for a lot of places in our economy. Largely because people are putting up protections against any uncertainty moving forward with the rest of COVID.
So we know that the markets aren't under stress. That's good. That's a good indicator of not anticipating this overall huge meltdown that's anticipated to happen from people who are just quoting random statistics.
Then what we also see is the 10-2 treasury year yield spread. Basically what this is showing us is investor sentiment. So the big players in the economy show how are they feeling about the long-term impact of the economy. When we start to see a number drop down, that's when investors feel like the long-term horizon is not going to be very great.
So in the 10-2 Treasury Year Yield, we were down near the beginning of COVID, and this is what's called an "Inverted Yield Curve". And when we have an Inverted Yield Curve, we usually end up seeing a recession happen very shortly afterward. But at the start of COVID, we touched or had an Inverted Yield Curve, but didn't stay there very long.
Now we are in a technical recession at this point. However, we are seeing an increase In the sentiment of investors moving forward, which again is another indicator showing us that there's a very low chance of the crash happening just because of a COVID wave.
As far as rates where this is showing us, this is showing us a chart of mortgage-backed securities. Basically, it's inverted, so when numbers go up this means rates are lower. And when the price goes down, that means rates go higher.
Now, what's very interesting about this is there's a trend from March to the end of November that prices have slowly gone up and then started to level out. That means rates have started to drop down and now are at a level.
There are also floors of support measured by different indicators like Fibonacci Sequences and daily moving averages that are keeping the rates where they're at.
So what most people are anticipating is rates are going to stay relatively similar to where they're at right now. And no one's anticipating them to go much higher, which again is really indicative of seeing a strong market, even as we're approaching the winter and the anticipation of this bigger COVID wave with increased hospitalizations.
Also, we're seeing 7% Annual Home Price Index from the case Schiller report. So this is incredible because if you think about a $300,000 house, if you purchase this in January, so January 1st. Until the end of this year, you're talking about a $21,000 increase just in appreciation on a $300,000 house. That's incredible.
So we're seeing this continue to increase and a lot of people are talking about the idea of a crash. The data just does not support a crash right now.
Especially because what we're also seeing is builder demand is not able to keep up at all with what's going on. We're seeing building permits stagnate in the end of October, which is indicating that we're probably not seeing a lot of new construction happening in the winter months. We're also seeing just from birth rates that were happening 33 years ago, we're going to see an increase in first time home buyers. That's already happening in the market, but we're going to see that continue for the next few years as well, increasing that demand.
So all know there most likely will not be a crash happening because of the new COVID wave.