The Mother Of All Housing Bubbles - David Stockman
Posted by freedomforall 1 month, 1 week ago to Economics
Excerpt:
"America’s bubblicious economy will soon hit another milestone of sorts—-the $50 trillion mark with respect to the market value of owner-occupied residential real estate. At the present moment, this figure (purple line) stands at $46 trillion (Q1 2024), which is nearly 2X its pre-crisis level of $24 trillion in Q4 2006. It’s also 8X its level when Greenspan took the helm at the Fed ($5.6 trillion) after Q2 1987 and a staggering 51X the $900 billion value of all owner-occupied homes when Tricky Dick did the dirty deed at Camp David in August 1971.
Needless to say, neither household incomes nor the overall US economy have grown at anything near those magnitudes. For instance, nominal GDP is up by 24X or less than half the gain in housing values since Q2 1971. As a consequence, the value of owner-occupied housing relative to GDP has climbed steadily higher over the last 50 year
...
Here’s the thing. The US economy was downright healthy in 1971. During the 18 years between 1953 and 1971 real median family income rose from $38,400 to $62,700 or by a robust 2.8% per annum. So the fact that residential housing represented only 79% of GDP at that point was not indicative of some grave deficiency or structural malfunction in the US economy.
Indeed, when you note that real median family income rose by only 0.8% per annum during the most recent 18 year period, or by just 29% of the 1953-1971 rate, you might well conclude that it would have been wise to leave well enough alone. Not only was the main street economy prospering mightily, but it was being accomplished with honest interest rates owing to Fed policy that was constrained by the Breton Woods gold exchange standard and also by the sound money philosophy that prevailed in the Eccles Building during the William McChesney Martin era."
"America’s bubblicious economy will soon hit another milestone of sorts—-the $50 trillion mark with respect to the market value of owner-occupied residential real estate. At the present moment, this figure (purple line) stands at $46 trillion (Q1 2024), which is nearly 2X its pre-crisis level of $24 trillion in Q4 2006. It’s also 8X its level when Greenspan took the helm at the Fed ($5.6 trillion) after Q2 1987 and a staggering 51X the $900 billion value of all owner-occupied homes when Tricky Dick did the dirty deed at Camp David in August 1971.
Needless to say, neither household incomes nor the overall US economy have grown at anything near those magnitudes. For instance, nominal GDP is up by 24X or less than half the gain in housing values since Q2 1971. As a consequence, the value of owner-occupied housing relative to GDP has climbed steadily higher over the last 50 year
...
Here’s the thing. The US economy was downright healthy in 1971. During the 18 years between 1953 and 1971 real median family income rose from $38,400 to $62,700 or by a robust 2.8% per annum. So the fact that residential housing represented only 79% of GDP at that point was not indicative of some grave deficiency or structural malfunction in the US economy.
Indeed, when you note that real median family income rose by only 0.8% per annum during the most recent 18 year period, or by just 29% of the 1953-1971 rate, you might well conclude that it would have been wise to leave well enough alone. Not only was the main street economy prospering mightily, but it was being accomplished with honest interest rates owing to Fed policy that was constrained by the Breton Woods gold exchange standard and also by the sound money philosophy that prevailed in the Eccles Building during the William McChesney Martin era."
reason: the new building is a ghost town
the funny thing, this "company" preaches saving the environment, the new parking garage is covered in solar panels
but they want us to drive to work, in my case that is a 70 mile round trip
certain cities down towns are also ghost towns
most due to democrat control allowing crime