Quote:
Originally Posted by OrdoSeclorum
I've heard this a lot from various quarters for almost a decade. I don't know enough myself to say for sure how QE has affected investments in real estate. But I do know that people who have said, "This is probably because of QE. Here is my prediction about what else it going to happen soon", those people are batting about 0.025 on prediction accuracy. Which makes me less confident about the rest of their claims about what QE is and is not responsible for.
I think in most cases, the solution that depends on the least number of speculative assumptions is usually the correct one. In Chicago, we have a high amount of demand due to a rapidly growing educated population and a new TOD ordinance that makes some of these lots near L-stations newly profitable to build on. I think that in the absence of a financial crisis or recession, supply would be created to meet this demand no matter what.
|
With inequality at an all time high, rich people have too much money and too few things that are actually worth buying. So anything that is perceived as potentially valuable rises in price, mainly equities and real estate. Equities, bonds, and real estate are already expensive compared to traditional valuations, and all at the same time, while reported inflation has remained low. this is not typical. we've also never had a period where interest rates have remained so low for so long. we dont have history to go off for the impact this might potentially have.
For the average person, wages have remained stagnant for 20 years. Taxes, healthcare, housing, college costs, utilities have all continued to rise. Over 50% Americans don't have $500 for an emergency. When it's normal for "middle class" families to pay thousands of dollars per month for healthcare, the entire system isn't far away from collapse.
Right now everybody wants to buy riskier assets. You've got people throwing life savings into highly speculative crypto-currencies. Theres an entire generation that knows nothing other than an uninterrupted 9 year bull market. "this time is different!"
Which is not to say it will come crashing down tomorrow. No one can say that. it keeps going until it dosent.