This Week’s Takeaways:
- Residential real estate price appreciation nationally isn’t keeping pace with inflation, indicating negative real returns, and price appreciation is slowing across the country despite regional winners and losers.
- The outlook for S&P 500 earnings two years is out is strong, but earnings growth is projected to decelerate from where it is today although still remaining at strong levels.
- The AI boom has been less a broad technology rally than a semiconductor-led market surge, with Nvidia and other chip stocks contributing an unusually large share of U.S. stock market returns while the benefits have spread selectively to data centers, power, utilities, and infrastructure rather than software.
- Families hesitant to overfund 529 plans should know that unused funds may still have valuable planning options, including Roth IRA transfers, changing beneficiaries, funding future generations’ education, paying student loans, or withdrawing scholarship amounts penalty-free.
- NSO income can be taxed twice if the brokerage-reported cost basis is too low, so employees need to adjust the basis on Form 8949 to reflect income already reported on their W-2.
- Plus, my latest book recommendation and this week’s Boston Corner.
Case-Shiller: National House Price Index Up 0.7% year-over-year in March by CalculatedRisk Newsletter
Home prices over the past year increased by .7% according to one study and 1.7% according to another. Both readings are less than inflation over the past year, leading to a negative real return on real estate for the past year. Nationally, there are winners and losers, with the Northeast and Midwest still strong compared to the Sun Belt and Western regions, but price appreciation is slowing down compared to year prior across the board.
See also: The 81 major housing markets with year-over-year home price declines—and the 219 posting mild gains by ResiClub
An early sneak peek at Wall Street’s 2028 outlook 🗓️ by TKer
The outlook for S&P 500 earnings two years is out is strong, but earnings growth is projected to decelerate from where it is today although still remaining at strong levels. It’s difficult to forecast that far out, but worth understanding what the market expects as a base case, particularly since earnings growth (or lack thereof) drives stock market performance.
3 Years of the AI Stock Market Boom in Charts by Morningstar
AI has been the dominant force behind stock market gains over the past three years, led by semiconductors and especially Nvidia, with chip stocks far outpacing the broader market and contributing a large share of total U.S. market returns. The boom has spread beyond chips into networking, data centers, power, utilities, and infrastructure companies, but it has not helped all technology stocks equally, with software companies lagging amid concerns that AI could disrupt parts of their business models. The surge has also increased market concentration, with the largest stocks making up a bigger share of the market, while private AI companies such as OpenAI and Anthropic have seen valuations rise dramatically.
Making the most of an overfunded 529 plan by Franklin Templeton
Families can be hesitate to contribute to 529’s in the event it gets overfunded relative to the ultimate cost of college. Unused 529 funds do not necessarily have to be withdrawn and taxed. They may be eligible to move into the beneficiary’s Roth IRA, though the rules are strict. Families can also keep the 529 invested and change the beneficiary to another qualified family member, preserving the account’s tax advantages for future education expenses, or use it down the road for future generations or to pay off student loans. Scholarship amounts can be withdrawn penalty free.
The NSO Tax Trap: Why Tech Professionals Sometimes Pay Tax Twice on the Same Income by Savant Wealth
Tech employees who exercise and sell non-qualified stock options can accidentally pay tax twice on the same income because the option spread is reported as W-2 compensation, but the brokerage 1099-B may show only the exercise price as the cost basis. The fix is to adjust the basis on Form 8949 so the income already taxed through payroll is added back to the stock’s cost basis, preventing the same spread from being treated again as a capital gain. Anyone who exercised NSOs in the past few years should review Schedule D, Form 8949, W-2 details, paystubs, and equity plan statements, and if the basis adjustment was missed, may be able to correct it with an amended return
Book Recommendation
Streetwise: Getting to and Through Goldman Sachs by Lloyd Blankfein
From the long-tenured head of Goldman Sachs, an institution legendary for its culture of success, comes a candid memoir of global leadership in an age of extreme turbulence.
Boston Corner
Cape Cod’s hottest new spots this summer by Axios
This New England metro has an ‘emerging’ new luxury real estate market by Boston.com
