Friday, March 21, 2014

A Bold Prediction: When Will Real Estate Fully Recover?

The following chart shows household and nonprofit real estate market value divided by disposable personal income (since 1980).


Click to enlarge.

So here is my bold prediction using 20/20 hindsight goggles. The market value of real estate compared to disposable personal income will fully recover one year ago!

As an added bonus, we're making sensational progress on reflating the next economy crippling housing bubble. This is fantastic news for those who believe that a stock market bubble alone can drive our economy forward in the coming years! Woohoo!

Too much sarcasm? Seems excessive again.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

6 comments:

Troy said...

On the inflation front:

"Butter, fluid milk and cheese prices are all up, due in large part to an increase in exports.

"Worldwide demand has been phenomenal," Marsh said. "And China is a big part of that."

For the short term, the higher price for milk is compensating for the high cost of feed that had been eating away farmers' profits."

http://www.fresnobee.com/2014/03/20/3833786/agriculture-forecast-san-joaquin.html#storylink=cpy

"Exports are inflationary" google search still only gets 10 hits, half of them me in various guises.

http://pdf.usaid.gov/pdf_docs/PNACL256.pdf is interesting, a Zambian 'Civics Education Manual' of all things.

There's also a 1942 report from Ireland, a 1976 Fed paper ('high grain exports are inflationary'), and many russian links to "Exports are inflationary because they generate income at home but reduce home supplies"

Stagflationary Mark said...

Troy,

Yeah, I noticed the milk (and dairy) increases lately.

Meanwhile, there's the imported sugar glut to offset it to some degree.

India, the world’s biggest sugar producer after Brazil, will subsidize shipments of raw sweetener to ease a domestic glut and help mills clear arrears of about $422 million to farmers before elections scheduled by May.

I love the "before elections" part. Gotta get those subsidies done in time, lol. Sigh.

Troy said...

http://www.marketwatch.com/story/almond-crunch-california-drought-withers-world-supply-2014-03-11

central part of my diet is almonds. I eat one serving a day religiously.

$4B+ in revenue for CA growers, that's 3M ounces of gold at current prices -- Canada's (#8 on the gold producer list) entire gold output.

I love ag. So magical, having wealth just appear on plants every year. No game really captures this, I mean the strategic importance of the ag economy. There's Farmville of course, but how food is produced and distributed is fascinating. It's so important to our economy yet the Fed focuses on 'nonfarm' so much.

When you take a fly-over of e.g. Germany, it's nothing but farms!

Only 2M workers apparently in the US:

http://research.stlouisfed.org/fred2/series/LNS12034560

feeding the world. True victory of capitalism, the mechanization of labor part. Our 1500+ acre farms really aren't capitalism per se, since natural productivity of our soil should be its own factor of production, by the tenets of Henry George at least.

Troy said...

(one serving a day is 22lbs a year, ~ten 38oz Costco containers (actually I buy my almonds from Trader Joes) and ~10X the current US per-capita consumption rate.

That 1oz plus cheese and crackers and maybe an apple bridges me between breakfast and dinner fine now.

Stagflationary Mark said...

Troy,

Almond crunch: California drought withers world supply

Ack! I prefer almond milk on my cereal (although who knows just how many almonds go in it).

Stagflationary Mark said...

Only 2M workers apparently in the US:

Wow. The chart is fascinating. It doesn't even look natural. Straight line down. Straight line across. Severe drop straight down. Straight line across again.

I wonder what happened in 1999/2000 to lose a million all at once.